What's going on?

IBM reported worse-than-expected quarterly results late last week, and investors � who sent its share price down 10% � aren�t sure switching it off and on again is going to fix things.

What does this mean?

IBM�s fourth-quarter revenue came in 7% lower than a year ago, and it fell short of investors� expectations as well. Those investors might not have been too fussed about that, mind you: they�re used to the company�s declining revenue now that this is the tenth quarter in a row it�s happened.


What they probably were fussed about was the drop in the cloud and software revenue that IBM�s been relying on to offset its shrinking legacy business. See, the company spent $34 billion on open-source company Red Hat in 2018 with the aim of shoring up its software segment, and it�s bought seven other cloud-focused firms since October too. But given that those acquisitions don�t seem to be paying off, growth-focused investors might be losing interest. Even IBM�s plan to split its “high-growth” cloud business into a separate company entirely mightn�t win them back unless, y�know, it actually grows�

Why should I care?

For markets: So much for cloud nine.

IBM blamed the drop-off on pandemic-related uncertainty, but � judging by this update and those from Oracle and SAP last year � cloud computing is generally proving a tough nut to crack. And while IBM�s hopeful that its cloud business will come good this year, it�ll have to pull something special out the bag: Microsoft and Amazon look ready to make the $1 trillion industry their own.

Zooming out: Go hardware or go home.

We�re in the earliest stages of this economic cycle, when growth makes its way back from lows and demand for construction materials and industrial machinery typically outstrips demand for IT services (tweet this). And that�s not been lost on investors: Siemens� stock rose 7% on Friday after the industrial conglomerate announced stronger-than-expected quarterly earnings.