Why IBM Is Tumbling: BRIC Sales Plunge, Total Revenue Lowest Since 2009

Tyler Durden's picture

Curious why after nearly touching $200 in early trading IBM is down 4% in after hours trading?

Perhaps this has something to do with it: as the chart below shows, in Q1 IBM reported only $22.5 billion in sales, well below the $22.9 billion expected by the street, and down 3.9% from a year ago. In fact, this quarter's revenue was the lowest for IBM since the first quarter of... 2009. Net Income (non-GAAP of course), which was $2.6 billion and which met reduced estimates, was down a whopping 22% from a year ago.

But the punchline, one which Cisco is very familiar with, was this:

Revenues from the company’s growth markets decreased 11 percent (down 5 percent, adjusting for currency).

 

Revenues in the BRIC countries — Brazil, Russia, India and China — decreased 11 percent (down 6 percent, adjusting for currency).

And so the Snowden curse strikes again, as countries which don't enjoy being constantly spied upon opt to not to business with the companies they believe are most instrumental in allowing the NSA into their midst.

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TideFighter's picture

GOOG feeling ickly too.

Buckaroo Banzai's picture

I've been waiting eagerly for this filthy pig to take the beating it so richly deserves.

Anybody who drinks the IBM haterade should check out Cringely's extensive work deconstructing this bloated airbag of a stock. You will love it.

http://www.cringely.com/?s=ibm

TruthInSunshine's picture

...aaaaaand Google misses all around with AH tumble...

p.s. - aaaand Nestle misses big...not just tech...Nestle coming out with "Essence of Chocolate" bars soon, though, so there's that...

fonzannoon's picture

wow the market already dismissed google from detention.

AlaricBalth's picture

The NSA's Trusted Access Program Office (TAPO) relies on IBM products. And so should you.

http://www.nsa.gov/business/programs/tapo.shtml

;-)

"Through industry partnership at IBM, TAPO offers:
Foundry Services including Multi Project Wafer runs, dedicated prototypes, and production in both high- and low-volume models.
Intellectual Property (IP) development, including standard prepurchased IP.
Packaging and test services.
Custom Logic Service: Cu-08, Cu-65HP, Cu-45HP, and Cu-32."

Say What Again's picture

What makes you so sure that the revenue short fall is tied to an association with the government and not a result of poor products, services, and sales strategies, coupled with the lack of capital for companies in the EM?

Squid Viscous's picture

and my magic OJ 8ball says we open ...Green!

John Law Lives's picture

"Nestle coming out with "Essence of Chocolate" bars soon, though, so there's that..."

+1

Nice one!

valley chick's picture

Made my day End The Fed!  Tried to buy in bulk from Nestle and was denied.  Told them I can take my money elsewhere. They treat the consumer like shit.

Supernova Born's picture

General Jack D. Ripper: Luckily I... I was able to interpret these feelings correctly. Loss of essence.
Group Capt. Lionel Mandrake: Hmm.
General Jack D. Ripper: I can assure you it has not recurred, Mandrake. Women uh... women sense my power and they seek the life essence. I, uh... I do not avoid women, Mandrake.
Group Capt. Lionel Mandrake: No.
General Jack D. Ripper: But I... I do deny them my essence.

NotApplicable's picture

So... the sanctions are working?

Vampyroteuthis infernalis's picture

IBM is a dionosaur being run by morons. If you invest in the cheapest overseas labor possible, the product will be low quality. This is the final result. No surprise here.

Squid Viscous's picture

it's GOOGL now they figured out a better way to swindle the common holders out of any voting rights, complicated as it was, but they had good jew lawyers no doubt

headhunt's picture

The liberals never want an ordinary citizen to be able to vote - for anything.

You cannot go further left than the g00gle boys.

 

TruthInSunshine's picture

As long as tech stock P/E ratios stay below an average of 9,000 I see
good things.

I'm sticking with highly negative P/E & P/S ratio companies, though, because that's where the value is, IMO.

Freddie's picture

IBM is another shit spy company and always has been. They have been working for the elites NWO nazi & zio families since before WW2. Just like AT&T back in the old days and today.

Why would any european, asian or other company want to use NSA spy shit El See Eye Ahaa Duh Obamo hardware or spyware?

F em!

Jumbotron's picture

Open source, Linux and in-house development by the big boys....Twitter, Facebook, Google, Amazon, Netflix.....etc.

Bitchez !

fonzannoon's picture

If these numbers are as bad as CAT and MCD this is incredibly bullish.

Freddie's picture

Well MCD makes shit GMO Monsanto fake Soylent Green "food." So who wants their shit? If donkey boys in Asia do not want their shit. CAT? Well their stuff is not loaded with spyware but how many more ghost cities can China build. "We no like spyware Uncle Sam Obama shit SkyNet spyware shit Yankee dogs!"

LooseLee's picture

...according to MORONS and IDIOTS et. al ONLY...

Squid Viscous's picture

let me have the temerity to say... bullish?

Tsar Pointless's picture

Indeed, Squid. Quite bullish.

S&P should ramp another 40 points and the DJIA another 350 alone on this news.

Squid Viscous's picture

I will be disappointed if we open lower than 187.0 spx, we can shrug off 500 billion of "tech giants" down 3-4%, no Russian tanks in Kiev... strong BUY

seek's picture

The NSA effect strikes again! (Hence they dumped the server biz on Lenovo so their biggest emerging market will keep buying hardware made by their biggest emerging market, and kept the service revenues coming.)

That, plus the markets are down in general. Intel reported their server business was down 7% Q/Q on units.

Tech is tanking, and I think it's a leading indicator of what's about to come.

fonzannoon's picture

Seek, the question I am posing is, if mega cap crap was the safe haven of last resort, and now we are going to chuck that out the window...where do we go next? My answer is 2.4% on the 10yr and lower in stawks. How about you?

seek's picture

The vibe I get (and we've seen it over and over on these pages the past couple months) is that economy is fucked and stocks are too.

Mega caps aren't the safe haven of last report. Cash is the safe haven of last resort (for those uninitiated in the ways of PMs, that is.) Between all this and Russia, I'm imagine we see a flight to cash and cash equivalents (10yr) soon. I wouldn't be surprised if the 10 year goes even lower than 2.4%. And the fuckers that issue them get a free ride and win once again. Ugh.

fonzannoon's picture

I think Doc makes a good point below. Everyone is still too happy to play make pretend and completely ignore that these companies are starting to feel the effects of joe six pack dropping dead. But I do wonder if we are on borrowed time now. Like really really borrowed time. Not just really borrowed time like it was from 2012 till now, or borrowed time like it was from 2009 to 2012.

seek's picture

We're definitely on borrowed time. If you look into the details -- end market details, not financials -- they're up from the early '09 crash numbers, but still down from the '07-'08 figures. That was six freaking years ago now. We've gone an entire five-year business cycle with zero improvement, meanwhile EBT has boomed and the actual employment has been flatlined since the crash, yet everything stumbles along (or grows.)

It's unsustainable and a lot of the larger corps know it. There's a reason they're not making capital investments, because they know it's pointless to do so.

As far as when this all comes home to roost -- I'm sure we'll see some correction soon. But the real correction is the collapse, and I'm still convinced it's a 2016-2018 kind of thing. Not that it won't get worse before then, of course.

 

Omen IV's picture

and that is without the anticipated effect from a competing intl. currency from Russia / China et al  kicks in 2015 - that takes say 25% of intl transactions  - the inflation from currency adjustment in USA will be incredible plus cloud / hardware services from say Swiss company dedicated to data integrity, german co for social media and email etc etc - replaces US sourcing

they will eventually call it the Long Term Obama  Effect in 2025  - destroyed the reserve currency with idiotic sanctions - warning anyone with cash to go away and his NSA destroyed US tech cos. intl sales.

he is truly incredible!

I Write Code's picture

PMs maybe, but cash is definitely NOT safe from a spike in inflation.

813kml's picture

As someone who just had an international IT contract delayed (more likely cancelled) yesterday because of 'security concerns', I can verify that the world is not happy about the NSA.  

The BRICS are building their own internet for a reason and the US is not invited.  The US is the new AOL, and is also SOL.

MFL8240's picture

Doesnt matter the stock will go up regardless!

HaroldWang's picture

Give it a day or two and endless soundbites from Yellen with Liesman telling everyone the economy is strong and new highs for IBM lie straight ahead.

Squid Viscous's picture

IBM is old economy, time to move ahead

Dr. Engali's picture

They don't care about the performance. The insiders will be protected and rewarded as long as they remain silent and do what the NSA tells them to do.

Shizzmoney's picture

Exactly

I mean, IBM has been on steep decline since the late 90s for Christ's sake.  How do folks think they've kept afloat?  Sales? LOL

Don't worry, they'll get the first crack at the govt contract when the riots start happening and they RFID all of the protestors.

NotApplicable's picture

They're pretty good at extorting cash from governments in exchage for building service centers there. Then they work the fools who think "Wow, I got hired by IBM! Awesome!" like an indentured servant until they finally wise up and leave, then they get the next fool in line to pick up the slack.

All in all, not a bad business model, as it beats working for a living.

TruthInSunshine's picture

Once IBM figures out how to monetize Watson (from Jeopardy fame) the sky is the limit.

Cursive's picture

I thought the answer was going to be that Big Blue accountant's ran out of phatom revenue to book.

Oldwood's picture

So the big question is...where is all of the money coming out of IBM stocks going? This is like playing wack-a-mole!

They are obviously not putting it in the bank to draw .5% so I assume they are pushing it elsewhere and that will be the next golden opportunity, right? It sure seems like a good time for a new ponzi scheme. With all this cash setting in piles of shit, people have to be looking for the buying opportunity. Maybe set up some new solar power grid system in the middle of Africa, or better yet, on Mars! Optimism is much easier to sustain when the object of your greed is far enough removed to avoid a reality check. I vote for a Hopium mine on Mars!

NOTaREALmerican's picture

It just adds to the pool of money "sitting on the sidelines" waiting for that next "buying opportunity". 

Unknown Poster's picture

I wonder how much is bought on margin, and do the loans just get paid off? The big money mutual funds that are constained in what they can invest in are probably hating their choices about now.

Cthonic's picture

what money?  oh i see, you thought there was some Volume associated with the price move...

Hal n back's picture

kind of zero sum huh? If you sell to me net cash sitting on sidelines is the same.

 

But our problem is we are not banks using OPM without recourse.

 

 

 

Son of Captain Nemo's picture

Look at the bright side.  SSL will finally get fixed and no more "heart burn" for the BRICS?

Hope IBM, HP, Cisco, Juniper get taken to the cleaners!

They had many opportunities to fix it and took the money and walked away!

NOTaREALmerican's picture

Gotta wonder tho,  is this a result of Snowdon and the NSA or just a general economic slowdown in those countries.

In reality, if you want a computer not invested with NSA spyware there's not allot of places to go yet. 

Son of Captain Nemo's picture

True.  And having just said that...

What an opportunity for countries like Germany to fill the void of American paranoia and controlled stupidity?

At this point the German people need to throw the Merkel government out on it's ass and start over.  With the way the U.S. is handling Eastern Europe and the rest of the World for that matter there is no future with the U.S. as a business partner!

Omen IV's picture

Intel Inside sticker on the laptop will revert to No NSA Inside - origin Switzerland  - with money back guarantee and insurance policy - same with cloud services