IBM focuses like a laser beam on delivering consistent earnings, and the company didn’t disappoint on Wednesday when it reported financial results for the second quarter ended in June. What it didn’t manage to do was clear up uncertainties about the company’s future growth engines, as IT spending continues to shift toward cloud computing and away from important categories for IBM.
For the three months ended June 30, IBM reported a year-over-year revenue decline of 3% to $ 24.9 billion. Nevertheless, the company managed to ring up an 8% non-GAAP increase in quarterly earnings. It even raised revenue expectations for the full year by 20 cents.
At first blush, the earnings figures were pleasing to investors, but “all in” data calculated based on generally accepted accounting practices included a $ 1 billion “workforce rebalancing” charge that sent quarterly earnings per share down 13% year over year.
Workforce rebalancing is a euphemism for layoffs pursued most aggressively in Europe and also in declining pockets of IBM’s services, hardware and software businesses. IBM does this sort of rebalancing every year, but it packed this year’s moves all into one quarter after reporting disappointing first quarter results.