IBM targets $40 billion in cloud, other growth areas by 2018

Thu Feb 26, 2015 8:28pm EST
 
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(Reuters) - International Business Machines Corp (IBM.N: Quote), which ruled computing in the age of the mainframe, is targeting $40 billion in annual revenue from the cloud, big data, security and other growth areas by 2018.

The aggressive target, set by IBM executives at the company's annual investor meeting in New York on Thursday, is the latest step for the technology giant towards emerging, high-margin businesses, and away from its previous strongholds in hardware and servers.

The $40 billion will come from areas which IBM calls its "strategic imperatives," namely cloud, analytics, mobile, social and security software.

That would represent about 44 percent of $90 billion in total revenue that analysts expect from IBM in 2018.

Those businesses generated $25 billion in revenue for IBM last year, or 27 percent of its total $93 billion in sales.

The company said it would shift $4 billion in spending to its "strategic imperatives" this year.

Revenue at IBM has gradually shrunk over the past three years as it sold off its unprofitable units in businesses such as low-end servers, semiconductors and cash registers.

IBM Chief Executive Virginia Rometty has said she was happy to jettison revenue from such unprofitable businesses, which she dubs "empty calories."

IBM revenue has now fallen for the past 11 quarters, while earnings growth has been sporadic.   Continued...

 
A worker is pictured behind a logo at the IBM stand on the CeBIT computer fair in Hanover February 26, 2011.   REUTERS/Tobias Schwarz