Just hours after announcing a $850m retail sales deal with Toshiba, IBM is reporting a drop in its hardware sales.
The company said that overall it had brought some $24.7bn in revenues last quarter, accounting for a $3.1bn net income. The 7.1 per cent drop in sales was offset in part by a five per cent bump in software revenues and a 25 per cent jump in revenue from the company's Smarter Planet initiative.
IBM senior vice president and chief financial officer Mark Loughridge told investors and analysts that the drop in hardware sales was to be expected following strong sales from last year's quarter.
Regional differences were also noted. Loughridge said that poor sales in Japan helped to bring down overall performance, while sales in the UK were up by a solid 10 per cent.
He noted that the company will look to pick up some of the slack with its recently-unveiled PureSystems line.
"This solution leverages IBM’s decades-long investment in innovation and radically simplifies enterprise computing," Loughridge proclaimed.
"This should start to contribute to the systems performance in the second half of the year. "
The numbers, however, raised eyeborws some analysts. Pund-IT principal analyst Charles King told V3 that the 25 per cent drop in revenues from the System Z platform could indicate a larger shift in the enteprise space.
"System Z has been powerhouse for decades now and it is still a premier computing platform in many large enterprises," King explained.
"But the real drive in the larger part of the server market is around x86, and IBM has a relatively modest portion of that market."
The report comes in the wake of an announcement that IBM will be shaking up its retail technology division. The company has entered into a deal with Toshiba to sell off its Retail Store Solutions point of sales business for roughly $850m.
In addition to the purchase, Toshiba TEC will also sign on to IBM's Smarter Commerce campaign in a multi-year deal.
"It makes sense that they are partnering with Toshiba as part of their Smarter Commerce Initiative," said Gartner research vice president Chris Ambrose, who told V3 that services and outsourcing in general could play a big role in IBM's 2012 outlook.
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