IBM Earnings Preview: Revenue Decline To Continue As Shift To Cloud Takes Center Stage
The big blue, IBM (NYSE:IBM) is set to report its Q2 2016 earnings on July 18th, 2016. In Q1 2016, its revenues declined by 2% in constant currency (4.6% as reported) to $18.68 billion due to declining revenue from middleware sales and the business services segment. However, new strategic initiatives — such as the Cloud, analytics, mobile computing, social media and security services — have helped the company to shore up its services revenues. We expect this trend has continued in Q2, and strategic initiatives will continue to post growth. Additionally, for Q2 2016, we expect that the shift to cloud boosted its infrastructure services revenues. However, the server hardware business is expected to suffer as Z-system servers are in late stage of the product cycle, and the storage business will post decline due to the secular decline in the industry. In Q2 2016, Trefis expects the company will continue to post a decline in revenues. Trefis estimates are as follows:
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