IBM Conference Call Takeaways (196.40 -0.62)
Took substantial charges during the qtr to realign to align resources and skills to demand profile it sees $1.5 bln in R&D spending reflects shift of development priorities to where co sees future growth Continue to see strong demand in mobile, cloud Hardware challenges persist (esp in US), combo of secular and cyclical challenges continued; now selling industry standard sever business to Lenovo (system x business) Improved gross margins by 90 bps driven by services and ongoing mix to software "Major market" revs down 1% in the qtr with improvement from last qtr driven by EMEA; growth markets were down 5%, despite high single digit growth in Latin America; expect it was take time for business in China to improve Views the bulk of its challenges in growth markets as cyclical and still see good long term opportunity Workforce rebalancing impacted SG&A base performance by 16 points Total backlog was $138 bln (up 1% in constant currency terms) including $3.8 bln for customer care divestiture Application server business delivered strong growth for 4th consecutive qtr; co is now 30% of market share Storage hardware revs down 23%; saw "substantial weakness" in high-end storage. $600 mln in FCF, down $1.1 bln y/y driven by $1.4 bln increase in tax payments driven by audit settlement payments and other prior periods that settled in the qtr Returned $59.2 bln to investors; at the end of 1Q have $6.3 bln remaining in buyback authorization Cloud revs up over 50%; strong growth of mobile and security Co ranked #1 overall business consulting and cloud professional services by IDC and #1 immobility consulting services by Forrester