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Will IBM Realize Growth In 2015?
International Business Machines Corp said it is projecting growth in its hardware sector next year as the company invests in research and development and abandons low-performing ventures.
The comments come less than one month after the world’s largest technology service company reported its lowest quarterly revenue in five years, weighed by sluggish global demand for its hardware, which plunged 23 percent in the first quarter of 2014.
The company added that growth in Latin America, the Middle East and Africa remain strong, and blamed falling revenue in China on government reforms affecting state-owned clients, and on the country’s hardware-heavy portfolio.
“We move on and we spread ourselves out, more industries, more clients, cloud, data, et cetera, around there,” said IBM Chief Executive Ginni Rometty at an investor briefing on Wednesday.
Chief Financial Officer Martin Schroeter said to stabilize the hardware sector IBM would continue to “refresh” hardware and further invest in research and development.
“Quite frankly, we are seeing very good growth out of software, good growth out of services, but challenges in hardware,” said Schroeter. “We will stabilize that hardware base and I am comfortable we will make that happen in 2014,” he said.
He reiterated the company’s EPS target for 2015 of at least $20. He expects a shift to higher-value business to bring in $3.25 and share repurchases to add $2 in earnings per share by 2015.
T.I. Blames Nokia For Lower Revenue
Texas Instruments has revised downward its revenue forecast for the second fiscal quarter due to a slackening in demand for its products from Nokia.
TI said its lower revenue projection is directly related to the market performance of Nokia, which has been experiencing its own troubles. The handset maker last week projected lower sales of devices and services due to lower average selling prices and fewer buyers of its phones.
TI is now forecasting revenue of $3.36 billion and $3.50 billion for the second fiscal quarter ending on June 30, down from $3.41 billion to $3.69 billion the company forecast on April 18 when reporting first quarter fiscal results.
“I would say characterizing as the bulk of it being Nokia is probably understating. Probably being closer to say all of the change in our … middle-of-the-range update versus what we were previously [projecting] was associated with that customer,” said Ron Slaymaker, vice president and head of investor relations at TI, during a revenue forecast conference call that was webcast on Wednesday.