IBM shares fell after revealing a fall in margins in Q1 with a 5% drop in total revenue to $18.7bn.
It has stopped breaking out figures by geography and revised its reporting structure, so by division, it reported that Cognitive Solutions (solutions software + transaction processing software) revenue fell 1.7% yr/yr to $4bn, with operating margin dropping to 21.8% from 32.6%. Global Business Services revenue was down -4.3% to $4.1bn, with operating margin dropping to 4.5% from 13.2%.
Tech Services & Cloud Platforms revenue was slightly lower - down -1.5% to $8.4bn; operating margin dropped to 3% from 13%. Systems (hardware) revenue dropped on disposals -21.8% to $1.7bn, although the mainframe upgrade cycle also played a role as it moved to an operating loss as margin dropped to -0.5% from 11.3%. Global Financing revenue -11.2% to $410M; operating margin fell to 43.1% from 49.2%.
The good news is 'strategic imperatives' revenue (cloud, analytics, and 'engagement') rose 14% yr/yr to $7bn with annual 'cloud delivered as a service' revenue run rate (boosted some by M&A) up 42% yr/yr to $5.4bn.
Mobile revenue rose 88% yr/yr, security 18%, and analytics 7%. It is cash-rich as free cash flow was $2.3bn, up from $1.1bn a year ago. IBM ended Q1 with $14.9bn in cash and $18.8bn in non-Global Financing debt.