IBM reports lower-than-expected Q3 revenue and flat income

IBM has suffered a drop in revenue and flat income growth after tax for the third quarter of 2012.

The company managed to make $24.7 billion (£15.3 billion) in revenue, after analysts had estimated a figure of $25.36 billion (£15.7 billion). This represents a five per cent fall from the corresponding period of time in 2011.

Net income amounted to $3.8 billion (£2.3 billion), around the same as that of the third quarter of last year, but share value increased by four per cent, to $3.33 (£2.06).

Mark Loughridge, chief financial officer at IBM, attributed the disappointing statistics to numerous factors but placed most of the blame on September's activities. He revealed that several substantial software deals fell through last month and that the company witnessed a reduction in customer spending. The financial performances recorded in July and August corresponded with forecasts.

Elsewhere, IBM paid sums of £100 million and over $400 million (£245 million) for pension-related fees and "workforce rebalancing" respectively. IBM's Global Business Services and several of its markets also endured falls in revenue. However, an extra $280 million (£173 million) was generated from the sale of the Retail Store Solutions business to Toshiba, though Loughridge claimed this too contributed to the overall reduction in revenue.

Compared to Q3 of last year, IBM's revenue in the Americas fell by four per cent, while that of Europe, the Middle East and Africa fell by nine per cent, down to $10.4 billion (£6.4 billion) and $7.2 billion (£4.5 billion), respectively.

From a year ago, Global Technology Services and Global Business Services fell by four per cent and six per cent, to $9.9 billion (£6.1 billion) and $3.6 billion (£2.2 billion). The $5.8 billion of software revenue embodied a one per cent decline, while Systems and Technology revenue fell 13 per cent, to $3.9 billion (£2.4 billion).

Chris Ambrose, research VP at Gartner Research, speculated that consumers might be altering their behaviour in regards to IT, attempting to cut costs by purchasing items less frequently. This outlook was, however, rejected by Loughridge.