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Segments
 9 Months Ended
Sep. 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 Platform, 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 September 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$
4,235 

 

$
4,191 

 

$
8,748 

 

$
1,558 

 

$
412 

 

$
19,145 

 

Internal revenue

 
667 

 
93 

 
180 

 
176 

 
352 

 
1,468 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$
4,902 

 

$
4,284 

 

$
8,929 

 

$
1,734 

 

$
763 

 

$
20,613 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income from continuing operations

 

$
1,574 

 

$
544 

 

$
1,288 

 

$
136 

 

$
355 

 

$
3,897 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 
7.0 

%
(1.0 

)%
2.6 

%
(20.5 

)%
(26.0 

)%
(1.0 

)%

Pre-tax income year-to-year change

 
(1.4 

)%
(18.0 

)%
(2.2 

)%
(45.3 

)%
(36.8 

)%
(11.2 

)%

Pre-tax income margin

 
32.1 

%
12.7 

%
14.4 

%
7.8 

%
46.5 

%
18.9 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended September 30, 2015*:

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$
4,052 

 

$
4,206 

 

$
8,541 

 

$
1,973 

 

$
447 

 

$
19,219 

 

Internal revenue

 
528 

 
120 

 
161 

 
209 

 
584 

 
1,601 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$
4,580 

 

$
4,326 

 

$
8,702 

 

$
2,182 

 

$
1,031 

 

$
20,821 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income from continuing operations

 

$
1,596 

 

$
664 

 

$
1,317 

 

$
248 

 

$
562 

 

$
4,387 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 
34.9 

%
15.4 

%
15.1 

%
11.4 

%
54.5 

%
21.1 

%

 

 

* Recast to conform with 2016 presentation.

 

Reconciliations to IBM as Reported:

 

(Dollars in millions)

 

 

 

 

 

For the three months ended September 30:

 

2016

 

2015*

 

Revenue:

 

 

 

 

 

Total reportable segments

 

$
20,613

 

$
20,821

 

Eliminations of internal transactions

 
(1,468

)
(1,601

)

Other revenue

 
81

 
60

 

 

 

 

 

 

 

Total consolidated revenue

 

$
19,226

 

$
19,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income from continuing operations:

 

 

 

 

 

Total reportable segments

 

$
3,897

 

$
4,387

 

Amortization of acquired intangible assets

 
(265

)
(162

)

Acquisition-related (charges)/income

 
(4

)
(4

)

Non-operating retirement-related (costs)/income

 
(139

)
(204

)

Eliminations of internal transactions

 
(185

)
(362

)

Unallocated corporate amounts

 
(42

)
(35

)

 

 

 

 

 

 

Total pre-tax income from continuing operations

 

$
3,263

 

$
3,621

 

 

 

 

 

 

 

 

 

 

 

* 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 nine months ended September 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$
12,889 

 

$
12,578 

 

$
26,029 

 

$
5,184 

 

$
1,245 

 

$
57,926 

 

Internal revenue

 
1,929 

 
310 

 
501 

 
594 

 
1,340 

 
4,673 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$
14,818 

 

$
12,888 

 

$
26,530 

 

$
5,778 

 

$
2,585 

 

$
62,599 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income from continuing operations

 

$
4,039 

 

$
1,210 

 

$
2,825 

 

$
354 

 

$
1,208 

 

$
9,636 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue year-to-year change

 
3.5 

%
(2.7 

)%
0.1 

%
(20.0 

)%
(20.7 

)%
(3.0 

)%

Pre-tax income year-to-year change

 
(18.4 

)%
(36.2 

)%
(26.8 

)%
(66.2 

)%
(28.5 

)%
(28.3 

)%

Pre-tax income margin

 
27.3 

%
9.4 

%
10.6 

%
6.1 

%
46.7 

%
15.4 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended September 30, 2015*:

 

 

 

 

 

 

 

 

 

 

 

 

 

External revenue

 

$
12,616 

 

$
12,869 

 

$
25,993 

 

$
6,656 

 

$
1,386 

 

$
59,520 

 

Internal revenue

 
1,695 

 
380 

 
500 

 
571 

 
1,874 

 
5,020 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$
14,311 

 

$
13,249 

 

$
26,493 

 

$
7,226 

 

$
3,261 

 

$
64,540 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income from continuing operations

 

$
4,949 

 

$
1,895 

 

$
3,861 

 

$
1,048 

 

$
1,690 

 

$
13,444 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income margin

 
34.6 

%
14.3 

%
14.6 

%
14.5 

%
51.8 

%
20.8 

%

 

 

* Recast to conform with 2016 presentation.

 

Reconciliations to IBM as Reported:

 

(Dollars in millions)

 

 

 

 

 

For the nine months ended September 30:

 

2016

 

2015*

 

Revenue:

 

 

 

 

 

Total reportable segments

 

$
62,599

 

$
64,540

 

Eliminations of internal transactions

 
(4,673

)
(5,020

)

Other revenue

 
223

 
162

 

 

 

 

 

 

 

Total consolidated revenue

 

$
58,149

 

$
59,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax income from continuing operations:

 

 

 

 

 

Total reportable segments

 

$
9,636

 

$
13,444

 

Amortization of acquired intangible assets

 
(742

)
(492

)

Acquisition-related (charges)/income

 
(1

)
(11

)

Non-operating retirement-related (costs)/income

 
(444

)
(831

)

Eliminations of internal transactions

 
(873

)
(1,175

)

Unallocated corporate amounts

 
(230

)
(88

)

 

 

 

 

 

 

Total pre-tax income from continuing operations

 

$
7,345

 

$
10,846

 

 

 

 

 

 

 

 

 

 

 

* Recast to conform with 2016 presentation.