After three straight quarters of growth for the iSeries, the final chapter for 2005 revealed a sharp decline of...
previously remarkable growth for Big Blue.
IBM's total revenues for the fourth quarter of 2005 ($24.4 billion) show a 12% decrease from the fourth quarter of 2004, including a notable 18% dip in revenues from its iSeries servers, which have otherwise seen an enormous resurgence in the last year alongside significant company backing in the form of technological upgrades and aggressive marketing.
According to analysts, part of the drop is related to the fact that the iSeries is in the midst of a product-line transition, causing potential customers to hold out for a few months before an assumedly attractive new product release.
"It was doubtless a disappointing iSeries result for IBM, but it's important not to over-interpret the results from any single quarter, or even any two quarters, as these things do fluctuate," wrote analyst Gordon Haff of Nashua, N.H.-based Illuminata, Inc. in an email exchange. "It's also true that the drop was relative to some stellar gains in prior quarters; the year as a whole was quite good."
Pund-IT Research principal analyst Charles King was also reluctant to assign worry to the numbers, citing recent success, noted commitment and future potential as reasons to presume a bounce-back.
"I really expect 2006 to have some good news for the iSeries. Some of the primary trends driving the market are virtualization and server consolidation, and those are two areas for which iSeries is well known and well respected," King said. "I think the ability to blend Windows and Linux and AS400 applications -- and AIX, they added last year -- in my mind that's a really big plus for them. iSeries offers more flexibility than any other platform out there."
More IBM numbers: revenues from the zSeries mainframe product increased 5% compared with the year-ago period. Total delivery of zSeries computing power, which is measured in millions of instructions per second (MIPS), increased 28%. Revenues from the pSeries Unix servers increased 4%, and xSeries servers were flat. In addition to the eServers, revenues from storage systems increased 24%, and microelectronics increased 48%.
Overall, fourth-quarter revenue decreased 12% (up 3%, adjusting for currency and the divested PC business). Revenues from IBM Global Services, including maintenance, decreased 5%. Revenues from software were flat.
"Our cash position remains very strong, and we saw impressive growth in important parts of our business, said Samuel J. Palmisano, IBM chairman and CEO in a statement. "We continued to make gains in emerging markets and in important sectors such as healthcare and transportation, and our microprocessors are powering the fast-growing home entertainment market. IBM is ready for 2006 as we continue to deliver on our agenda of driving innovation and transformation for our clients and their businesses."
Let us know what you think about the story; e-mail: Joe Spurr, News Writer