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Segments
 6 Months Ended
Jun. 30, 2016
Segments:  
Segments:

6. Segments: The tables on pages 28 and 29 reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is based on operating pre-tax income from continuing operations. These results are used, in part, by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments.

 

In January 2016, the company made a number of changes to its organizational structure and management system consistent with its ongoing transformation to a cognitive solutions and cloud platform business. With these changes, the company updated its reportable segments. The company continues to have five reportable segments as follows:

 

The Cognitive Solutions segment includes solutions units that address many of the company’s strategic areas, including analytics, commerce and security, several of the new initiatives around Watson, Watson Health, Watson Internet of Things and Transaction Processing Software. The Technology Services & Cloud Platforms segment includes the company’s cloud infrastructure and platform capabilities, the previously reported Global Technology Services business and Integration Software. Operating Systems Software has been aligned with the underlying hardware platforms in the Systems segment. The Global Business Services and Global Financing segments remain unchanged.

 

The company also realigned a portion of its software support revenue, which was previously managed and reported in Integrated Technology Services within Global Technology Services, to the underlying software product areas.

 

SEGMENT INFORMATION

 

 

 

Cognitive Solutions&

 

 

 

 

 

 

 

 

 

 

 

Industry Services

 

Technology

 

 

 

 

 

 

 

 

 

 

 

Global

 

Services &

 

 

 

 

 

 

 

 

 

Cognitive

 

Business

 

Cloud

 

 

 

Global

 

Total

 

(Dollars in millions)

 

Solutions

 

Services

 

Platforms

 

Systems

 

Financing

 

Segments

 

For the three months ended June 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$
4,675 

 

$
4,255 

 

$
8,857 

 

$
1,950 

 

$
424 

 

$
20,162 

 

Internal revenue

 
594 

 
103 

 
156 

 
206 

 
502 

 
1,561 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$
5,269 

 

$
4,359 

 

$
9,013 

 

$
2,156 

 

$
926 

 

$
21,723 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income/(loss) from continuing operations

 

$
1,451 

 

$
476 

 

$
1,279 

 

$
229 

 

$
467 

 

$
3,901 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 
4.4 

%
(2.6 

)%
(0.6 

)%
(21.0 

)%
(21.7 

)%
(3.5 

)%

Pre-tax income year-to-year change

 
(20.5 

)%
(26.1 

)%
(9.5 

)%
(57.5 

)%
(23.8 

)%
(22.5 

)%

Pre-tax income margin

 
27.5 

%
10.9 

%
14.2 

%
10.6 

%
50.5 

%
18.0 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended June 30, 2015*:

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$
4,516 

 

$
4,345 

 

$
8,898 

 

$
2,541 

 

$
478 

 

$
20,778 

 

Internal revenue

 
532 

 
130 

 
173 

 
189 

 
704 

 
1,728 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$
5,049 

 

$
4,475 

 

$
9,071 

 

$
2,730 

 

$
1,182 

 

$
22,506 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income from continuing operations

 

$
1,825 

 

$
643 

 

$
1,414 

 

$
538 

 

$
613 

 

$
5,033 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 
36.1 

%
14.4 

%
15.6 

%
19.7 

%
51.9 

%
22.4 

%

 

*Recast to conform with 2016 presentation.

 

Reconciliations to IBM as Reported:

 

(Dollars in millions)

 

 

 

 

 

For the three months ended June 30:

 

2016

 

2015*

 

Revenue:

 

 

 

 

 

Total reportable segments

 

$
21,723

 

$
22,506

 

Eliminations of internal transactions

 
(1,561

)
(1,728

)

Other revenue

 
76

 
35

 

 

 

 

 

 

 

Total consolidated revenue

 

$
20,238

 

$
20,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income from continuing operations:

 

 

 

 

 

Total reportable segments

 

$
3,901

 

$
5,033

 

Amortization of acquired intangible assets

 
(265

)
(160

)

Acquisition-related (charges)/income

 
(23

)
(7

)

Non-operating retirement-related (costs)/income

 
(163

)
(186

)

Eliminations of internal transactions

 
(334

)
(473

)

Unallocated corporate amounts

 
(67

)
18

 

 

 

 

 

 

 

Total pre-tax income from continuing operations

 

$
3,049

 

$
4,224

 

 

 

 

 

 

 

 

 

 

*Recast to conform with 2016 presentation.

 

SEGMENT INFORMATION

 

 

 

Cognitive Solutions &

 

 

 

 

 

 

 

 

 

 

 

Industry Services

 

Technology

 

 

 

 

 

 

 

 

 

 

 

Global

 

Services &

 

 

 

 

 

 

 

 

 

Cognitive

 

Business

 

Cloud

 

 

 

Global

 

Total

 

(Dollars in millions)

 

Solutions

 

Services

 

Platforms

 

Systems

 

Financing

 

Segments

 

For the six months ended June 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$
8,654 

 

$
8,387 

 

$
17,280 

 

$
3,626 

 

$
834 

 

$
38,781 

 

Internal revenue

 
1,262 

 
216 

 
321 

 
418 

 
988 

 
3,206 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$
9,916 

 

$
8,603 

 

$
17,602 

 

$
4,044 

 

$
1,822 

 

$
41,987 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income/(loss) from continuing operations

 

$
2,465 

 

$
665 

 

$
1,537 

 

$
218 

 

$
853 

 

$
5,739 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 
1.9 

%
(3.6 

)%
(1.1 

)%
(19.8 

)%
(18.3 

)%
(4.0 

)%

Pre-tax income year-to-year change

 
(26.5 

)%
(46.0 

)%
(39.6 

)%
(72.7 

)%
(24.4 

)%
(36.6 

)%

Pre-tax income margin

 
24.9 

%
7.7 

%
8.7 

%
5.4 

%
46.8 

%
13.7 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended June 30, 2015*:

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$
8,564 

 

$
8,663 

 

$
17,452 

 

$
4,683 

 

$
939 

 

$
40,301 

 

Internal revenue

 
1,167 

 
261 

 
339 

 
362 

 
1,290 

 
3,419 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$
9,731 

 

$
8,923 

 

$
17,791 

 

$
5,044 

 

$
2,229 

 

$
43,719 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income from continuing operations

 

$
3,353 

 

$
1,231 

 

$
2,544 

 

$
800 

 

$
1,128 

 

$
9,056 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 
34.5 

%
13.8 

%
14.3 

%
15.9 

%
50.6 

%
20.7 

%

 

* Recast to conform with 2016 presentation.

 

Reconciliations to IBM as Reported:

 

(Dollars in millions)

 

 

 

 

 

For the six months ended June 30:

 

2016

 

2015*

 

Revenue:

 

 

 

 

 

Total reportable segments

 

$
41,987

 

$
43,719

 

Eliminations of internal transactions

 
(3,206

)
(3,419

)

Other revenue

 
142

 
102

 

 

 

 

 

 

 

Total consolidated revenue

 

$
38,923

 

$
40,403

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income from continuing operations:

 

 

 

 

 

Total reportable segments

 

$
5,739

 

$
9,056

 

Amortization of acquired intangible assets

 
(477

)
(330

)

Acquisition-related charges

 
3

 
(8

)

Non-operating retirement-related (costs)/income

 
(306

)
(627

)

Eliminations of internal transactions

 
(689

)
(813

)

Unallocated corporate amounts

 
(189

)
(53

)

 

 

 

 

 

 

Total pre-tax income from continuing operations

 

$
4,082

 

$
7,225

 

 

 

 

 

 

 

 

 

 

* Recast to conform with 2016 presentation.