IBM’s Rometty: That Extra $20 Billion? We’re So There, Almost.
Computing and services giant IBM published its annual report over the weekend, and one of the highlights was the first letter to shareholders by new CEO Ginni Rometty.
And the highlight of that letter was an update on Big Blue’s progress toward meeting its growth targets for the year 2015. IBM has long promised to add $20 in per-share earnings and $20 billion in incremental revenue growth by that year. The crux of Rometty’s letter: “We’re on it.”
“The next decade holds enormous promise for IBM, most importantly because of what it holds for business and society at large. We are uniquely positioned to deliver the benefits of a vast new natural resource — a gusher of data from both man-made and natural systems that can now be tapped to help businesses and institutions succeed in an increasingly complex and dynamic global economy.”
So how will it get there? By doing more of what it’s been doing the last several years. In broad brushstrokes, that means pursuing lines of business that have a lot of value — and which carry a higher margin — and focusing less on hardware. Generally speaking, that has meant a big shift into services that bear a long-term revenue stream with them.
But it also means a shift to software. One key piece of the strategy has IBM generating about half of its segment profits from software by 2015. As of 2011, it was already at 44 percent.
It also means going global in a big way and reaching into smaller markets that are breaking out. About 22 percent of IBM’s revenue came from these so-called “growth markets” in 2011, and the plan is to push that to 30 percent by 2015. And it’s not coming from the BRIC countries you always hear about (Brazil, Russia, India, China) but others in Africa and Asia: Some 60 percent of revenue from growth countries comes from non-BRIC countries.
There’s a lot more of these interesting facts from IBM’s annual report in an infographic here.