| Segments |
8. Segments: In the first quarter of 2019, the company made a number of changes to its organizational structure and management system that brought cloud and cognitive software under one organization to more effectively address evolving client needs and to prepare for the pending acquisition of Red Hat, Inc. (Red Hat). With these changes, the company has revised its reportable segments, but did not impact its Consolidated Financial Statements. In addition, the company is presenting the results of its announced divestitures in an “Other” segment, as the realignment of these businesses allows for a better representation of management’s view of the company, as well as the ongoing operational performance of the reportable segments. The company’s segments are as follows:
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2018 Segments
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|
Changes (+/-)
|
|
2019 Segments
|
|
|
|
|
|
|
|
Cognitive Solutions
|
|
+ Integration Software
+ Security Services
- Divested Select Software*
+ Red Hat (post closing)
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|
Cloud & Cognitive Software
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|
|
|
|
|
|
|
Global Business Services
|
|
- Divested Mortgage Servicing**
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|
Global Business Services
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|
|
|
|
|
|
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Technology Services & Cloud Platforms
|
|
- Security Services
- Integration Software
|
|
Global Technology Services
|
|
|
|
|
|
|
|
Systems
|
|
|
|
Systems
|
|
|
|
|
|
|
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Global Financing
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|
|
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Global Financing
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|
|
|
|
|
|
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Other
|
|
+ Divested Mortgage Servicing**
+ Divested Select Software*
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Other
|
* IBM announced sales of select software assets expected to close mid-2019. Refer to note 11, “Acquisitions/Divestitures,” for additional information.
**IBM completed the sale of the mortgage servicing business on February 28, 2019.
The tables below reflect the continuing operations results 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. The segments represent components of the company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker (the chief executive officer) in determining how to allocate resources and evaluate performance. The tables reflect the segment recast for the prior-year period.
SEGMENT INFORMATION
|
|
|
Cloud &
|
|
Global
|
|
Global
|
|
|
|
|
|
|
|
|
|
|
Cognitive
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|
Business
|
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Technology
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|
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Global
|
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Total
|
|
|
(Dollars in millions)
|
|
Software
|
|
Services
|
|
Services
|
|
Systems
|
|
Financing
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|
Segments
|
|
|
For the three months ended March 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenue
|
|
$
|
5,037
|
|
$
|
4,119
|
|
$
|
6,875
|
|
$
|
1,328
|
|
$
|
406
|
|
$
|
17,765
|
|
|
Internal revenue
|
|
841
|
|
74
|
|
290
|
|
163
|
|
300
|
|
1,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
5,879
|
|
$
|
4,193
|
|
$
|
7,164
|
|
$
|
1,491
|
|
$
|
706
|
|
$
|
19,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income/(loss) from continuing operations
|
|
$
|
1,767
|
|
$
|
315
|
|
$
|
275
|
|
$
|
(202
|
)
|
$
|
288
|
|
$
|
2,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue year-to-year change
|
|
(2.8
|
)%
|
(0.3
|
)%
|
(5.3
|
)%
|
(9.8
|
)%
|
(15.4
|
)%
|
(4.3
|
)%
|
|
Pre-tax income year-to-year change
|
|
5.2
|
%
|
152.1
|
%
|
315.1
|
%
|
(0.4
|
)%
|
(23.4
|
)%
|
19.5
|
%
|
|
Pre-tax income/(loss) margin
|
|
30.1
|
%
|
7.5
|
%
|
3.8
|
%
|
(13.5
|
)%
|
40.8
|
%
|
12.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External revenue
|
|
$
|
5,116
|
*
|
$
|
4,115
|
*
|
$
|
7,421
|
*
|
$
|
1,500
|
|
$
|
405
|
|
$
|
18,557
|
*
|
|
Internal revenue
|
|
931
|
*
|
89
|
|
141
|
|
153
|
|
429
|
|
1,743
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
6,047
|
*
|
$
|
4,204
|
*
|
$
|
7,562
|
*
|
$
|
1,653
|
|
$
|
834
|
|
$
|
20,299
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income/(loss) from continuing operations
|
|
$
|
1,680
|
*
|
$
|
125
|
*
|
$
|
66
|
*
|
$
|
(203
|
)
|
$
|
377
|
|
$
|
2,045
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income/(loss) margin
|
|
27.8
|
%*
|
3.0
|
%*
|
0.9
|
%*
|
(12.3
|
)%
|
45.1
|
%
|
10.1
|
%*
|
* Recast to conform to 2019 presentation.
Reconciliations to IBM as Reported:
|
(Dollars in millions)
|
|
|
|
|
|
|
For the three months ended March 31:
|
|
2019
|
|
2018
|
|
|
Revenue:
|
|
|
|
|
|
|
Total reportable segments
|
|
$
|
19,433
|
|
$
|
20,299
|
*
|
|
Other — divested businesses
|
|
343
|
|
446
|
*
|
|
Other revenue
|
|
74
|
|
69
|
|
|
Eliminations of internal transactions
|
|
(1,668
|
)
|
(1,743
|
)*
|
|
|
|
|
|
|
|
|
Total consolidated revenue
|
|
$
|
18,182
|
|
$
|
19,072
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income from continuing operations:
|
|
|
|
|
|
|
Total reportable segments
|
|
$
|
2,444
|
|
$
|
2,045
|
*
|
|
Amortization of acquired intangible assets
|
|
(173
|
)
|
(203
|
)
|
|
Acquisition-related (charges)/income
|
|
(39
|
)
|
0
|
|
|
Non-operating retirement-related (costs)/income
|
|
(138
|
)
|
(402
|
)
|
|
Eliminations of internal transactions
|
|
(89
|
)
|
(190
|
)*
|
|
Other — divested businesses
|
|
(55
|
)
|
14
|
*
|
|
Unallocated corporate amounts
|
|
(67
|
)
|
(130
|
)
|
|
|
|
|
|
|
|
|
Total pre-tax income from continuing operations
|
|
$
|
1,883
|
|
$
|
1,136
|
|
|
|
|
|
|
|
|
|
|
* Recast to conform to 2019 presentation.
|