IBM Australia sales plunge half-a-billion dollars

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IBM Australia sales plunge half-a-billion dollars

IBM Australia's revenue plunged more than half a billion dollars in 2014.

The giant vendor's revenue for the year ending 31 December 2014 – made public last month in its most recent filing to corporate regulator ASIC – was $3.53 billion, a $594 million drop from the previous year.

Services, its largest division, took the biggest hit. Services revenue dropped $515 million, going from a $3.1 billion business in 2013 to $2.56 billion in the year ending last December.

Sales of goods and income from financing remained relatively steady. Goods were worth $866 million of revenue, compared with $929 million the previous year. Financing brought in $102 million to the books, down slightly from $119 million in 2013.

IBM Australia recorded $145.9 million of net profit for the year, which was also down – the company made $233.2 million in 2013.

While the Australian arm of the US vendor would not to comment to CRN about the results, ANZ acting channel leader Paul Richardson did talk up some of its recent achievements.

"As part of our transformation, IBM is investing in cloud, analytics, social, mobile and security that deliver higher value and innovation to our clients.  The strategy is paying off, with these strategic imperatives now representing US$25 billion and 27 percent of our revenue.

"In Australia last year, our investment in these areas included the opening of the SoftLayer data centre, IX Studio, Mobile First and Bluemix Labs."

According to Reuters, Big Blue has been busy in recent years getting rid of low-margin operations such as cash registers, low-end servers and semiconductors, in order to focus on emerging fields like security software and cloud.

However, the transformation hasn't yet halted the slide in revenue either internationally or locally, with reports last month of some investors losing patience and agitating for action. In January, IBM was forced to deny reports of a plan to lay-off 112,000 employees.

The once-dominant Big Blue has seen its fair share of bad news in recent times. Last month, the global entity racked up its 12th consecutive quarter of falling revenue, while the Australian arm lost a $242 million services contract with the federal Department of Health to New Zealand IT provider Datacom.

In February, IBM chief executive Ginni Rometty acknowledged the hardships of transformation to partners, while predicting growth in the year ahead. In the same month, the vendor brought back performance bonuses for its top executives, including Rometty, which had been voluntarily frozen the previous year.

IBM Australia's two top channel executives, Phil Cameron and Leo Lynch, both departed at the end of last year. A company spokesperson could not reveal how the search for permanent replacements is progressing.

Any downsizing in its channel organisation would make some sense, given that IBM sold its commodity server business to Lenovo. CRN also revealed that IBM Australia is leaning more on distributors.

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