According to Gartner’s latest report on Global IT spending, economic recovery across the world is helping improve worldwide IT spending which is now projected to grow 3.2% this year to $3.8 trillion. Gartner expects a significant recovery in the Devices Market as global spending will grow 4.4% to $689 billion compared with a 1.4% decline reported a year ago. Similarly spending on Data Center Services is expected to improve 2.3% to $143 billion compared with the 0.2% decline a year ago and spending on Telecom Services will improve 1.3% to $1.66 billion from the 0.5% decline last year. Enterprise Software market will see the strongest growth at 6.9% to $320 billion followed by a 4.6% improvement in IT Services spending growing to $964 billion.
Meanwhile, IBM’s (Nasdaq: IBM) Q1 revenues fell 3.9% over the year to $22.48 billion, falling short, yet again, of the market’s expectations of $22.93 billion. EPS of $2.54 was in line with the Street’s projections.
By segment, revenues for the software segment grew 2% over the year to $5.7 billion. Systems and technology segment revenues fell 23% to $2.4 billion and revenues from IT services unit fell 3% to $9.3 billion. Global business services revenues remained flat at $4.5 billion and global financing revenues improved 3% to $512 million.
IBM saw revenues from the Americas’ fall 4% to $9.6 billion while EMEA revenues improved 4% to $7.6 billion. APAC revenues declined 12% to $5.0 billion.
For the current year, IBM repeated their expectation of an EPS of at least $18.00, ahead of the Street’s projected EPS of $17.88.
IBM’s Product Upgrades
IBM continues to shift their focus to high margin segments and is delivering upgraded products to achieve this objective. During the recently ended quarter, IBM released more than 30 new services for BlueMix, their platform-as-a-solution offering. BlueMix was released in February this year has been built on an open framework. It leverages Cloud Foundry to offer web and enterprise developers to build applications and integrate services and APIs for easier development, testing and scaling of custom applications. BlueMix not only ensures a secure connection between an organization’s public applications and private data through a Cloud integration service but also delivers a secure connection through the cloud between Internet of Things and machine to machine device to help analyze data. It is also useful for its ability to design and scale applications that turn Big Data into competitive intelligence and a DevOps service that supports the complete developer lifecycle.
After selling their low end server business to Lenovo for $2.3 billion, IBM is now focusing on upgrading their Server offerings. Earlier last month, they released new Power Systems servers that will allow data centers to manage big data requirements at faster speeds. The servers are built on an open server platform and utilize IBM’s high speed Power8 processors and have the capability of delivering data analytics at very high speeds. IBM also announced plans to join the OpenPower foundation with the likes of Google and Nvidia in a move to improve data center infrastructure across the tech community through an open framework.
Earlier this month, IBM’s supercomputer group, Watson Group, also announced plans to acquire artificial intelligence company, Cognea, for an undisclosed sum. Cognea is known for their improved cognitive computing and conversational artificial intelligence platform that helps them provide virtual assistants to users based on their personalities. Their customer list includes the likes of NASA and HP to name a few. IBM plans to integrate Cognea’s intelligent conversational skills with Watson to deliver a system which has the ability to have real conversations with its users.
Last month, IBM had also acquired Silverpop, an Atlanta-based privately held software firm for an undisclosed sum. Silverpop’s solutions enable marketers to deliver personalized customer engagements through the cloud in scalable environments. Silverpop’s customer list includes the names like Mazda and Stonyfield Farm. IBM plans to leverage the acquisition to enhance their SaaS based marketing automation offerings.
IBM’s stock is trading at $185.24 with a market capitalization of $187.5 billion. It touched a year high of $211.98 in May last year.