IBM said its revenue dropped 4.2 percent to $19.16 billion in the second quarter of 2019 due to weakness in the company’s legacy business of selling hardware.
IBM’s revenues have dipped for a fourth straight quarter, pointing to continued pressure on its older products and services despite years of trying to reposition itself in growth markets such as cloud computing, artificial intelligence and blockchain.
IBM suffered 22 straight quarters of revenue contraction before returning to growth for a short-lived period in late 2017.
IBM’s revenue from Cloud & Cognitive Software — including cloud and data platforms, cognitive applications and transaction processing platforms – rose 3.2 percent to $5.6 billion. IBM achieved revenue growth of 5 percent in cloud and data platforms, 3 percent in cognitive applications and 2 percent in transaction processing platforms.
IBM this week announced a multi-billion Cloud deal with AT&T, a leading telecom operator in the United States, for running its business solutions.
IBM’s revenue from Global Business Services – including consulting, application management and global process services) – grew 0.5 percent to $4.2 billion.
IBM’s revenue from Global Technology Services – including infrastructure and cloud services and technology support services – fell 6.7 percent to $6.8 billion.
IBM’s revenue from Systems – including systems hardware and operating systems software – dropped 19.5 percent to $1.8 billion.
IBM generated $351 million (–11 percent) revenue from Global Financing business that includes financing and used equipment sales.
Last week, IBM completed its $34 billion acquisition of Linux maker Red Hat as part of the strategy to expand its subscription-based software offerings. The second quarter revenue does not include revenue from Red Hat.
IBM CEO Ginni Rometty said: “With the completion of our acquisition of Red Hat, we will provide the only true open hybrid multi-cloud platform in the industry.”
IBM will provide an update on 2019 adjusted earnings, including impact from Red Hat on August 2.
IBM’s net income rose to $2.50 billion, or $2.81 per share, in the second quarter ended June 30 from $2.40 billion, or $2.61 per share, a year earlier.