IBM: Fiscal 3Q16 Financial Results

Uninterrupted fall of storage hardware now under $500 million
By Jean Jacques Maleval on 2016.10.19

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IBM Corp. announced 3FQ16 results ended September 30, 2016.

As usual, it's the first company involved in storage announcing its financial results for the third quarter of the year.

For the third time, the company published one and only one figure for its storage business: -9% Y/Y decrease for hardware revenue during the quarter.  It was 13% during the former quarter.

It's horrible and dramatic: the 20th consecutive quarter with Y/Y decreasing hardware storage sales. It seems that nothing can interrupt this continuous fall and we don't see any aggressive move to reverse this trend.

As the figure of $510 million was released 3FQ15, we conclude that storage revenue for 3FQ16 reach less than half billion dollar for the first time, only $464 million. IBM storage could finish FY16 with less than $2 billion in FY15.

Commenting this bad result, Martin Schroeter, IBM's SVP and CFO, stated: "Storage hardware was down 9% Y/Y this quarter reflecting the ongoing shift in value towards software. Gross margin is down reflecting both volume and price pressure. The hardware decline was mainly driven by low end and mid-range traditional disk storage. Our high-end disk storage grew this quarter. All flash array revenue grew as we have expanded our flash technology across our product portfolio. We recently rolled out new products and transition to a full suite of flash offerings making us competitively positioned, and while now in our system segment we also continue to see double digit revenue growth in software-defined storage, so across system, we're facing product cycle headwinds and some transitions in POWER and storage, while continuing to deliver important technologies and capabilities to address cognitive and cloud."

Revenue Growth of IBM Storage Products

Fiscal period
Y/Y growth
4Q11 -1%
1Q12 -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%
4Q15 -11%
1Q16 -6%
2Q16 -13%
3Q16 -9%

To read the earnings call transcript