1 Reason IBM May Fail to Deliver on Cloud Computing Profits

April 23, 2015 Off By David

Grazed from Fool. Author: Jeremy Bowman.

International Business Machines Corp. suffered another setback on Monday after the tech titan registered its 12th straight quarterly sales decline as investors continue to wait for the company turnaround strategy to bear fruit. Shares traded down just 1% the day after the earnings release as the report was not all bad news. Management said adjusted operating profits rose 4%, and currency-neutral revenues in strategic imperatives rose 30%.

As IBM transforms itself from a hardware manufacturer to a 21st century tech-services provider, the company has staked its future on core offerings that it believes will eventually drive sales and profits consistently higher. Those are cloud computing, business analytics, growth markets, and smarter planet, according to its 2011 Road Map to the Future…

Today, both the company and analysts seem to believe that cloud computing is the key component for the future, and in its recent earnings report, management noted as a bright spot that cloud computing was on track to reach $3.8 billion in revenue this year, up from $2.3 billion last year. In February, management also said it would grow revenue from cloud and related future-oriented businesses to $40 billion by 2018, which seems like a big promise, considering those segments delivered less than $25 billion in sales last year…

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