IBM Stands Behind Cloud-Computing Accounting Amid SEC Probe
July 31, 2013
Grazed from Bloomberg. Author: Sarah Frier.
International Business Machines Corp. (IBM), facing a U.S. Securities and Exchange Commission investigation into how it reports revenue from offsite cloud services, said it stands by its accounting methods. IBM is cooperating with the SEC in the probe, which it learned about in May, it said today in a filing. The company books its revenue from cloud services, such as storing customers’ data and software applications remotely, under generally accepted accounting principles, said Ed Barbini, a spokesman for Armonk, New York-based IBM.
“IBM’s reporting of cloud revenue is the result of a rigorous and disciplined process, and we are confident that the information we have provided has been consistently accurate,” Barbini said. Chief Executive Officer Ginni Rometty has identified cloud computing as one of IBM’s chief sources of growth amid a slowdown in demand for hardware and for consulting services…
The investigation at the company, known for consistently meeting analysts’ earnings estimates, underscores confusion about how cloud revenue should be booked, said Michael Cusumano, a management professor at the Massachusetts Institute of Technology’s Sloan School of Management…
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