IT industry reassurance: IBM Australia shows steady results


news Australia’s IT professionals are likely to be reassured by the news this week that industry bellwether IBM has posted a set of financial results substantially similar to the ones achieved twelve months earlier.

Over the past several months, a number of early indications have pointed to a potential slowdown in Australia’s IT industry, with major companies such as Telstra, Optus, HPE, Oracle and IBM all going through redundancy rounds.

These companies are regarded as IT industry bellwethers, because globally their performance has been linked to the broader performance of the industry. If these large companies start laying off substantial staff numbers, it has often in the past been a sign that the industry as a whole can expect broader restructuring and turmoil.

However, the latest set of financial results published by IBM, through the Australian Securities and Investments Commission, point in the opposite direction.

Late last week Big Blue notified ASIC that it had made total revenues in Australia of $3.1 billion for the year ended 31 December. That figure was down only slightly on the $3.53 billion which IBM pulled in the 12 months’ previously.

The actual mix of IBM Australia’s revenues changed somewhat, with the company making several hundred million dollars more (to a total of $1.02 billion) from the sale of goods than it had made the 12 months previously, and the company conversely made less from its IT services business.

IBM listed its gross profit for the year as being $719.38 million, while its net profit was down to $53 million, compared with $146 million the previous year. The company paid a paltry $28.59 million in corporate tax in the period.

The news also goes against the flow of IBM’s global financial results, showing health in its Australian business.

In mid-April, IBM reported its worst quarterly revenue in 14 years, with the company’s new investments in cloud and mobile not offsetting problems with its other businesses. The company’s shares sank nearly five percent, while its revenue fell 4.6 percent over the quarter.

Reuters reported that it was the sixteenth straight quarter of revenue decline for Big Blue’s global operation.

Interesting that IBM Australia has held the line with its annual financial results; this is something that I didn’t expect. I would have expected the company, which has suffered a range of problems recently ranging from weakness in its traditional businesses to layoffs, to show some issues in its Australian business.

I suspect that the strong showing of IBM Australia — holding the line almost strictly on last year’s result — reflects a still-growing appetite amongst major Australian organisations for IT outsourcing and also a reocgnition that companies like IBM will be key to major digital transformation initiatives.

IBM has also made a number of acquisitions over the past several years, and that’s probably also helping. Big Blue has one of the largest and most diversified technology product ranges in existence.

The news will also somewhat reassure the local IT industry. If IBM Australia is holding the line, so the logic goes, probably everyone else will have had a decent last year as well, and things will likely be looking up this year, jobs- and finance-wise.

Image credit: Patrick, Creative Commons