Date: Thursday 26 Feb 2015
LONDON (ShareCast) - US tech giant International Business Machines Corp, widely known as IBM, warned that the strength of the US dollar will reduce the company's revenue growth in the first quarter of 2015 by more than it had previously expected.
The warning comes a day after tech peer Hewlett Packard warned it will incur adverse currency effects due to the stronger US dollar, costing the group more than it expected to split into two.
In a filing to the US regulator, the Securities and Exchange Commission, IBM said that based on February 25, 2015 spot FX rates, the strong dollar is expected to impact revenue growth by over seven points for the first quarter of 2015, and over six points for the full year, much more than the impact they had previously factored in, based on January 16 spot rates.
That being said, the group said it is targeting $40bn in annual revenue from the cloud, big data, security and other growth areas by 2018. As such, it maintained its earnings forecast, which it expects to generate operating earnings per share between $15.75 and $16.50 a share this year.
IBM's $40bn target is the latest step by the technology giant towards shifting its core purpose toward emerging, high-margin businesses and away from its previous reliance to hardware and servers. The company said it will generate $40bn from areas which it calls "strategic imperatives", namely cloud, analytics, mobile, social and security software.
Those businesses generated $25bn in revenue for IBM last year, or about 27% of its total $93bn in sales. IBM added that its long-term plan is to hit "low single-digit" revenue growth and "high single-digit" growth in operating earnings per share.
Email this article to a friend
or share it with one of these popular networks: