UK improving for IBM despite Q3 misery

Big Blue's share price slumps five per cent as it stumbles to 14th consecutive quarterly revenue fall

IBM is enjoying improving fortunes in the UK and other parts of EMEA despite posting a 14 per cent global sales slump in its Q3 and lowering profit expectations for the year.

Big Blue's share price slumped five per cent in after-hours trading last night as it unveiled its fourteenth consecutive set of quarterly results showing declining revenues.

Revenues of $19.3bn for the three months to 30 September were down 14 per cent year on year, or one per cent adjusting for currency effects and the System x sale, as slow sales in its home US market and the BRIC countries dragged on the top line.

IBM said the results reflect the progress it is making in its transformation.

Revenues in EMEA rose one per cent to $6.1bn, adjusting for currency effects and the System x sale. IBM said it had enjoyed "improved performance" in the UK and France, adding that, alongside Japan, Germany was the strongest performer globally.

Out of IBM's five technology segments, three saw sales fall even after adjusting for currency effects and the System x sale.

On that basis, Software was down three per cent $5.2bn, Global Business Services fell five per cent to $4.2bn and Hardware dropped two per cent to $1.5bn. Its largest arm, Global Technology Services, fared better, with sales rising one per cent to $7.9bn, while Global Financing sales were also up seven per cent to $0.4bn.

IBM stressed that revenue from the "strategic imperatives" in which it is investing heavily continue to grow handsomely, with sales of cloud, analytics, security, social and mobile rising 27 per cent in Q3 adjusting for currency and divested business.

For the year to date, IBM boasted that its cloud, business analytics, security and social sales are up 45, nine, six and 32 per cent, respectively (rising to 65, 19, 12 and 40 per cent adjusting for currency effects and stripping out System x). Year-to-date revenues for mobile have more than quadrupled, Big Blue added.

"Our third quarter results reflect the progress we're making in that transformation," said IBM CFO Marting Schroeter.

"We always said this would play out over time, though this quarter we fell a little short of the revenue expectations we set for ourselves."

IBM downgraded its full-year profit expectations to reflect the slowdown it has seen in sales of business services. It now expects full-year earnings-per-share to come it between $14.75 and $15.75, down from its previous guidance of between $15.75 and $16.50.