Despite Q1 revenue inching up 3 percent year-over-year to $22.9 billion at IBM, Big Blue's CFO Thursday admitted the company could have done better in the hard quarter and said there may be some sizable restructuring activities in the near future.

"First, we had a disappointing quarter in services. Contributing to the shortfall was a decline in short term signings, that impacted not only the total reported signings, but also our revenue and profit performance. Second, we experienced an elongated sales cycle in a few of our product areas – due to both sales execution and customer deferrals. We always have deals that don’t close, but more than a normal level of deals slipped this quarter. Third, while we had good customer acceptance of our new storage products, our results were impacted by late product availability," Mark Loughridge said on the company's Q1 call.

"Overall, we could have done better this quarter. But, we had two soft weeks, following several consecutive quarters of solid performance. We’re taking actions to address the issues, and improve our overall performance."

Loughridge exampled company efforts to address sales execution issues across hardware, software and services; shift investments from low yielding areas to areas of growth; and optimize its operating model to efficient and effective client-facing capabilities.

"Many of these activities were already under way. Given the softness in the last two weeks, we have decided to accelerate these plans. A couple of these actions may require some sizable restructuring activities, primarily designed to move decision making closer to the customer and improve the speed of execution at the customer level, " he said, noting that more detail will come out as Q2 progresses.

The CFO expects that the actions IBM is planning to take in Q2 will start to yield benefits in the second half. "We’re driving to get there a different way, on lower revenue, and more cost and expense savings. Looking forward, we remain committed to our longer-term model to deliver double-digit earnings per share growth."

By: DocMemory
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