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Hardware torpedoes IBM's Q4 revenue

Sluggish sales of IBM mainframes and other hardware put a damper on the company's latest quarterly earnings report

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Still hampered by slow hardware sales, IBM reported a 5.5 percent decline in revenue for the fourth quarter, even as it managed to post a 6 percent gain in net income.

Because of the sluggish revenue, IBM senior management will forgo their bonuses, or "personal annual incentive payments," for the year, said Ginni Rometty, IBM chairman, president and CEO, in a statement.

IBM's fourth-quarter revenue was US$27.7 billion, compared with $29.3 billion in the fourth quarter of 2012, the company announced Tuesday. Revenue for the entire year was $99.8 billion, compared with $104.5 billion in the year prior, a 4.6 percent decrease.

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IBM's fourth-quarter income was $6.2 billion, compared with $5.8 billion in the fourth quarter of 2012. For the year, IBM reported $16.5 billion in income, down 1 percent from $16.6 billion in the prior year.

Revenue from IBM's Systems and Technology hardware segment was $4.3 billion, down 26 percent from the fourth quarter in 2013. For the year, Systems and Technology delivered $14.4 billion, a decrease of 18.7 percent from the full year 2012.

The services divisions produced so-so results for the company. Revenue from Global Technology Services was $9.9 billion for the quarter, down 3.6 percent from $10.3 billion the same quarter a year before. Revenue from the Global Business Services segment grew slightly, up 0.6 percent to $4.7 billion for the fourth quarter, which ended Dec. 31.

For the year, Global Technology Services revenue shrank to $38.5 billion, down 4.2 percent from $40 million the year before. Global Business Services revenue also shrank by 0.9 percent, to $18.4 billion from $18.6 billion a year ago.

Revenue from the software business grew modestly. For the fourth quarter of 2013, the software group logged $8.1 billion in revenue, a 2.8 percent increase from $7.9 billion in the same quarter a year ago. For the year, the IBM software group generated $26 billion in revenue, up 1.9 percent from $25.4 billion in 2012.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com



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