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IBM feels the sales squeeze

IBM is facing economic headwinds after a disappointing third quarter, particularly in its Asian division.

IBM is facing economic headwinds after a disappointing third quarter, particularly in its Asian division.

IBM had a tough quarter, new earnings reports show. Quarterly revenue fell 4 percent, according to Fox Business, hitting $23.7 billion. The consensus reading was $24.75 billion, exposing the company to renewed doubt regarding its long-term viability. IBM has been deflecting such concerns for the past few years, but unfortunately for both the business and its stock price, investors don't seem to be buying it.

Poor sales in emerging markets, including 15 percent in China alone, have fueled IBM's image as a struggling company. Once the giant of its day, IBM is now trying to reconcile its more traditional tech structure with agile competitors like Apple. Even its Americas operations came out negative, reporting a 1 percent revenue decline compared to 2012 levels.

The repercussions of IBM's performance are already being felt. The company announced a leadership shakeup designed to push more innovative voices into the upper echelon. According to The Wall Street Journal, Chief Executive Officer Virginia Rometty announced that several top-tier employees were being moved around.

"We clearly need to do better," Rometty wrote in an email excerpted by the Journal. "Ours is a pay for performance culture and we must all be committed to taking action to address our performance gaps."

Whether or not these changes are effective remains to be seen. There are rumors circulating in the independent blog community that concerns among Chinese government officials about NSA spying activities, and IBM's role in those in particular, have hurt the company's brand in that part of the world. Watch for fourth-quarter results to see how much weight this notion holds.

In the meantime, investors shouldn't stand idle while a volatile investing climate worsens. Portfolio risk management software like SmartStops can help individuals protect their investments and find true growth opportunities. 

Categories: Stock News

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