IBM's revenue drops after 3 consecutive quarters of growth

Jessica Kim Cohen -

IBM has reported $18.8 billion in revenue for the third quarter of 2018, down 2 percent from the same period last year — halting the company's recent pattern of revenue growth.

In January, the Armonk, N.Y.-based tech giant broke its 22-quarter streak of declining revenues, reporting $22.5 billion in revenue for the fourth quarter of 2017, a 4 percent increase from the same period one year prior. The improvement represented the first quarter IBM had reported revenue growth in more than five years.

At the time, IBM officials attributed its improvement to earnings from "strategic imperatives" — the company's newer initiatives like artificial intelligence, cloud computing and data analytics. These projects comprised $36.5 billion in earnings during 2017, representing 46 percent of the company's revenue that year.

IBM's strategic imperatives continued to experience growth in the third quarter of 2018, despite the company's overall drop in revenue, according to earnings results posted Oct. 16. Revenue from strategic imperatives topped $9.3 billion in the third quarter, up 7 percent year over year. Cloud revenue hit $4.6 billion, up 13 percent, and analytics revenue hit $5 billion, up 2 percent.

IBM officials continued to credit the company's performance to these strategic imperatives, and highlighted its AI solutions for healthcare and cybersecurity as key growth areas. Revenues for IBM's AI segment — which it refers to as "cognitive solutions" — were down 6 percent during the third quarter at $4.1 billion.

"Our leadership in the technology and services that deliver hybrid cloud, AI, blockchain, analytics and security has helped drive our overall performance," Ginni Rometty, chairman, president and CEO of IBM, said in a news release. "IBM's progress and momentum this year in the emerging, high-value segments of the IT industry are driven by our innovative technology, deep industry expertise and commitment to trust and security."

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