IBM: Fiscal 3Q15 Financial Results
Worst quarter since at least 4Q11 in storage, down 19% Y/Y
By Jean Jacques Maleval | October 21, 2015 at 3:06 pmWe don’t know any public IT company in storage with this kind of ugly results of in last four years.
And most recent quarter records the highest negative Y/Y percentage of IBM in system storage, 19% (14% adjusting for currency) since at least … 4Q11 ! (see table below)
This business represents 34% of total system hardware segment being $1.5 billion and declining 2% during the quarter, then only $510 million for storage that surpasses $1 billion in 4Q12.
With $476 million in 1Q15, $630 million in 2Q15 and $510 million in 3Q15, or a total of $1.6 billion for the nine-month period, annual revenue in storage will probably just surpass $2 billion for 2015. It was $2.7 billion in 2014, already deceasing 12% compared to 2013.
What’s the explanation of IBM’s SVP and CFO Martin Schroeter: “The hardware decline was driven by storage which continues to be a tough market.” Not for all storage companies, especially the firms with innovative hardware, software and cloud storage offerings.
For Schroeter, “(…) there is a future in storage and it’s all about flash. It’s all about software-defined and it’s all about object store.” We agree but it’s today just a small part of Big Blue’s storage business with poor results in high end disk systems and tape.
He added:” (…) when we look at the future of the storage business we see terrific growth in flash up again more than 50% in each of the last three quarters.”
How long IBM will accept to see its storage system business decreasing at this speed? New activities in SSD systems, object storage (with acquisition of Cleversafe) and software-defined storage are currenly too small to compensate other declining businesses.
Is there a pilot in the plane?
Furthermore it will be difficult for Big Blue to sell its storage activity as the company has a lot of big customers with high end products. These clients will not appreciate at all to pursue with another firm, especially for the services.
Revenue Growth of IBM System Storage
| Fiscal period |
Y/Y Growth |
| 4Q11 | -1% |
| 1Q12 | -4% |
| 2Q12 |
-4% |
| 3Q12 | -10% |
| 4Q12 | -5% |
| 1Q13 | -11% |
| 2Q13 | -7% |
| 3Q13 | -11% |
| 4Q13 | -13% |
| 1Q14 | -23% |
| 2Q14 | -12% |
| 3Q14 | -6% |
| 4Q14 | -8% |
| 1Q15 | -4% |
| 2Q15 | -10% |
| 3Q15 | -19% |
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