IBM, Microsoft struggle while SAP largely bucks the trend

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IBM, Microsoft struggle while SAP largely bucks the trend | Business Cloud News

IBM, Microsoft and SAP all released their financial results this week

IBM and Microsoft revealed steep losses this week as the two companies released their Q2 financial results, but SAP seems to have bucked the trend with close to 130 per cent growth in cloud revenues and 13 per cent growth in revenue.

IBM revealed second quarter net income from continuing operations was $3.5bn compared with $4.3bn in the second quarter of 2014, a decrease of 17 per cent, and revenue was down 13 per cent, much of which it blamed on recent large divestitures and related cash impairments.

Year on year growth in its cloud business – from $2.8bn in the second quarter last year to $4.5bn in Q2 2015 – and ten per cent growth in its analytics business hasn’t fully compensated for some of the challenges the company facing elsewhere in its business. The company’s revenues have been in decline for almost three years sequentially.

“Our results for the first half of 2015 demonstrate that we continue to transform our business to higher value and return value to shareholders,” said Ginni Rometty, IBM chairman, president and chief executive officer. “We expanded margins, continued to innovate across our portfolio and delivered strong growth in our strategic imperatives of cloud, analytics and engagement, which are becoming a significant part of our business.”

Microsoft saw quarterly revenues hit $22.2bn in Q2 this year, but the company reported record losses of $14.7bn, much of which resulted from the impact of its $7.5bn write-down of its failing Nokia business, with other costs related to the restructuring nearing $1bn. The company also said the strengthening of the dollar relative to other currencies had a significant impact on its results.

But Microsoft reported commercial cloud revenues grew of 88 per cent in the quarter, driven largely by Office 365, Azure and Dynamics CRM Online uptake, while the division selling on-premise licenses for its productivity offerings declined 4 per cent; the company said it added roughly 3 million cloud users in the quarter.

“In our commercial business we continue to transform the product mix to annuity cloud solutions and now have 75,000 partners transacting in our cloud,” said Kevin Turner, chief operating officer at Microsoft.

German software giant SAP seems to be one of the few large incumbents bucking the trend this quarter. The company revealed cloud subscriptions and support revenue grew 129 per cent in Q2, new cloud bookings were up 162 per cent, and it more than doubled its SAP HANA customers year on year (from 3,600 to over 7,200). The company reported overall quarterly revenues rose 13 per cent to €1.39bn.

“Our second quarter growth in new cloud bookings was significantly higher than in the first quarter. This momentum showed across our entire cloud and business network portfolio,” said SAP chief financial officer Luka Mucic. “Our operating profit performance is beginning to reflect the business transformation we initiated to make SAP ready for the future. We are on track to achieve our full year business outlook.”

The results come as all three companies – Microsoft, IBM and SAP – continue ambitious redeployment and reorganisation efforts to address a shift in the market towards cloud services and away from legacy software and services.

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