IBM Results Beat Expectations Despite Revenue Fall

However, he noted that IBM has some very strong tailwinds heading into the second quarter of 2013, particularly in the software pipeline. “We have a very good software pipeline going into the second half of the year,” he said.

Divisional Performance

For the second quarter, revenues from IBM’s software segment were $6.4 billion (£4.2bn), up 4 percent compared with the second quarter of 2012. Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Social Workforce Solutions (formerly Lotus) and Rational products, were $4.3 billion (£2.8bn), up 9 percent versus the second quarter of 2012. Operating systems revenues of $606 million (£399m) were down 4 percent compared with the prior-year quarter.

Breaking things down a bit further, revenues from the WebSphere family of software products increased 9 percent year over year. Information Management software revenues increased 5 percent. Revenues from Tivoli software increased 13 percent. Revenues from Social Workforce Solutions increased 22 percent, and Rational software increased 12 percent.

Revenues from the Systems and Technology segment totalled $3.8 billion (£2.5bn) for the quarter, down 12 percent from the second quarter of 2012. Excluding Retail Store Solutions (RSS), revenues were down 8 percent. Total systems revenues, excluding RSS, decreased 10 percent. Revenues from Power Systems were down 25 percent compared with the 2012 period. Revenues from System x were down 11 percent. However, revenues from System z mainframe server products increased 10 percent compared with the year-ago period. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), increased 23 percent. Revenues from System Storage decreased 7 percent. And revenues from Microelectronics OEM increased 6 percent, IBM said.

In its services business, IBM’s Global Technology Services segment revenues decreased 5 percent to $9.5 billion (£6.3bn) and Global Business Services segment revenues were down 1 percent to $4.6 billion (£3bn). IBM’s estimated services backlog as of 30 June was $141 billion (£92.9bn), up 3 percent year over year, Loughridge said.

“We’re exiting this quarter stronger than we entered it,” Loughridge said.

He said the workforce restructuring will begin to “yield” or pay off in the third quarter of 2013 and then continue in the fourth quarter of 2013 and the first and second quarters of 2014.

Loughridge also said the majority of the expense for the workforce rebalancing is spent “overseas, outside the US.” He said about $600 million (£395m) of the $1 billion figure benefits services, with about $200 million (£132m) going to both software and services.

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Originally published on eWeek.