IBM's Australian profits down but sales stable at $3.5 billion

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IBM's Australian profits down but sales stable at $3.5 billion

IBM's Australian net profits fell 60 percent in its 2015 financial year, while revenue held roughly stable after last year's significant fall.

Net profit for IBM Australia fell to $53.3 million from $145 million in the year prior, at least partially due to a hefty tax bill of $28.6 million. The company paid just under $8 million in tax in 2014 despite the big profit, after deferring a large portion of the bill.

The Australian business unit's total 2015 revenue held stable at $3.5 billion, compared with $3.52 billion the previous year. IBM offset a near-$170 million fall in services revenue by increasing sales of goods by $160 million.

There was no repeat of last year's disappointing revenue fall, when IBM's Australian revenue plummeted almost $600 million, largely due to a decline in services revenue.

The giant vendor had $2.4 billion in total current assets at the end of 2015, while its total liabilities sat at just under the same figure.

Changing mix

At a global level, IBM has been working to diversify beyond its traditional hardware and services businesses in favour of more lucrative revenue streams in cloud computing and security.

However, the strategic shift has yet to offset the decline in its traditional segments, with global revenue from "strategic imperatives" like cloud and data analytics growing 14 percent in the first quarter, while its hardware revenue fell 22 percent.

A spokesperson for IBM Australia said its emerging businesses now accounted for 36 percent of local revenue, compared with 22 percent in 2014.

"Our strategy is resonating with our clients, and we continue to invest in this market with the opening of the Watson client experience centre last October," the spokesperson said.

"IBM’s cognitive and cloud technologies are helping drive Australia’s transformation from assisting students find future jobs to helping citizens connect with government, projects essential to Australia’s future prosperity and international competitiveness."

Earlier this month, IBM globally posted its worst quarterly revenue in 14 years and its 16th straight quarter of decline. Revenue for the company fell 4.6 percent to US$18.7 billion (A$24 billion) in the first quarter.

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