| Segments |
8. Segments: The following tables reflect the continuing operations results of the company’s segments consistent with the management and measurement system utilized within the company. Effective with the closing of the transaction in July, Red Hat is included in the Cloud & Cognitive Software segment. The “Other” segment includes the divested mortgage servicing and select software businesses. 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 segments recast for the prior-year period due to the company’s segment changes effective January 2019. SEGMENT INFORMATION | | | | | | | | | | | | | | | | | | | | | | Cloud & | | Global | | Global | | | | | | | | | | | | | Cognitive | | Business | | Technology | | | | | Global | | Total | | (Dollars in millions) | | Software | | Services | | Services | | Systems | | Financing | | Segments | | For the three months ended September 30, 2019: | | | | | | | | | | | | | | | | | | | | External revenue | | $ | 5,280 | | $ | 4,117 | | $ | 6,700 | | $ | 1,481 | | $ | 343 | | $ | 17,921 | | Internal revenue | | | 686 | | | 70 | | | 287 | | | 195 | | | 302 | | | 1,541 | | Total revenue | | $ | 5,966 | | $ | 4,187 | | $ | 6,988 | | $ | 1,676 | | $ | 645 | | $ | 19,462 | | Pre-tax income/(loss) from continuing operations | | $ | 1,283 | | $ | 573 | | $ | 490 | | $ | 39 | | $ | 275 | | $ | 2,661 | | Revenue year-to-year change | | | 4.0 | % | | 0.8 | % | | (5.3) | % | | (12.6) | % | | (11.2) | % | | (2.3) | % | Pre-tax income year-to-year change | | | (37.4) | % | | 1.2 | % | | (19.2) | % | | (81.3) | % | | (10.8) | % | | (28.9) | % | Pre-tax income/(loss) margin | | | 21.5 | % | | 13.7 | % | | 7.0 | % | | 2.3 | % | | 42.6 | % | | 13.7 | % | | | | | | | | | | | | | | | | | | | | | For the three months ended September 30, 2018: | | | | | | | | | | | | | | | | | | | | External revenue | | $ | 4,962 | * | $ | 4,076 | * | $ | 7,101 | * | $ | 1,736 | | $ | 388 | | $ | 18,262 | * | Internal revenue | | | 777 | * | | 77 | | | 279 | * | | 181 | | | 338 | | | 1,652 | * | Total revenue | | $ | 5,738 | * | $ | 4,153 | * | $ | 7,380 | * | $ | 1,917 | | $ | 726 | | $ | 19,914 | * | Pre-tax income/(loss) from continuing operations | | $ | 2,050 | * | $ | 566 | * | $ | 607 | * | $ | 209 | | $ | 308 | | $ | 3,741 | * | Pre-tax income/(loss) margin | | | 35.7 | %* | | 13.6 | %* | | 8.2 | %* | | 10.9 | % | | 42.5 | % | | 18.8 | %* |
* Recast to conform to 2019 presentation. Reconciliations to IBM as Reported: | | | | | | | | (Dollars in millions) | | | | | | | | For the three months ended September 30: | | 2019 | | 2018 | | Revenue: | | | | | | | | Total reportable segments | | $ | 19,462 | | $ | 19,914 | * | Other — divested businesses | | | 48 | | | 432 | * | Other revenue | | | 59 | | | 62 | | Eliminations of internal transactions | | | (1,541) | | | (1,652) | * | Total consolidated revenue | | $ | 18,028 | | $ | 18,756 | | | | | | | | | | Pre-tax income from continuing operations: | | | | | | | | Total reportable segments | | $ | 2,661 | | $ | 3,741 | * | Amortization of acquired intangible assets | | | (473) | | | (207) | | Acquisition-related (charges)/income | | | (255) | | | (2) | | Non-operating retirement-related (costs)/income | | | (145) | | | (389) | | Eliminations of internal transactions | | | (84) | | | (118) | * | Other — divested businesses | | | (25) | | | 62 | * | Unallocated corporate amounts | | | (157) | | | (91) | | Total pre-tax income from continuing operations | | $ | 1,522 | | $ | 2,996 | |
* Recast to conform to 2019 presentation. SEGMENT INFORMATION | | | | | | | | | | | | | | | | | | | | | | Cloud & | | Global | | Global | | | | | | | | | | | | | Cognitive | | Business | | Technology | | | | | Global | | Total | | (Dollars in millions) | | Software | | Services | | Services | | Systems | | Financing | | Segments | | For the nine months ended September 30, 2019: | | | | | | | | | | | | | | | | | | | | External revenue | | $ | 15,962 | | $ | 12,391 | | $ | 20,412 | | $ | 4,562 | | $ | 1,100 | | $ | 54,426 | | Internal revenue | | | 2,135 | | | 213 | | | 879 | | | 528 | | | 884 | | | 4,638 | | Total revenue | | $ | 18,097 | | $ | 12,604 | | $ | 21,291 | | $ | 5,091 | | $ | 1,983 | | $ | 59,065 | | Pre-tax income/(loss) from continuing operations | | $ | 5,052 | | $ | 1,188 | | $ | 1,000 | | $ | (101) | | $ | 803 | | $ | 7,941 | | Revenue year-to-year change | | | 0.2 | % | | 0.2 | % | | (5.1) | % | | (15.0) | % | | (18.3) | % | | (3.9) | % | Pre-tax income year-to-year change | | | (12.3) | % | | 11.7 | % | | (11.0) | % | | (128.8) | % | | (23.0) | % | | (15.0) | % | Pre-tax income/(loss) margin | | | 27.9 | % | | 9.4 | % | | 4.7 | % | | (2.0) | % | | 40.5 | % | | 13.4 | % | | | | | | | | | | | | | | | | | | | | | For the nine months ended September 30, 2018: | | | | | | | | | | | | | | | | | | | | External revenue | | $ | 15,548 | * | $ | 12,326 | * | $ | 21,846 | * | $ | 5,412 | | $ | 1,188 | | $ | 56,319 | * | Internal revenue | | | 2,518 | * | | 249 | | | 589 | * | | 576 | | | 1,240 | | | 5,173 | * | Total revenue | | $ | 18,066 | * | $ | 12,575 | * | $ | 22,435 | * | $ | 5,989 | | $ | 2,428 | | $ | 61,492 | * | Pre-tax income/(loss) from continuing operations | | $ | 5,760 | * | $ | 1,063 | * | $ | 1,124 | * | $ | 352 | | $ | 1,042 | | $ | 9,342 | * | Pre-tax income/(loss) margin | | | 31.9 | %* | | 8.5 | %* | | 5.0 | %* | | 5.9 | % | | 42.9 | % | | 15.2 | %* |
* Recast to conform to 2019 presentation. Reconciliations to IBM as Reported: | | | | | | | | (Dollars in millions) | | | | | | | | For the nine months ended September 30: | | 2019 | | 2018 | | Revenue: | | | | | | | | Total reportable segments | | $ | 59,065 | | $ | 61,492 | * | Other — divested businesses | | | 754 | | | 1,335 | * | Other revenue | | | 190 | | | 176 | | Eliminations of internal transactions | | | (4,638) | | | (5,173) | * | Total consolidated revenue | | $ | 55,370 | | $ | 57,830 | | | | | | | | | | Pre-tax income from continuing operations: | | | | | | | | Total reportable segments | | $ | 7,941 | | $ | 9,342 | * | Amortization of acquired intangible assets | | | (816) | | | (613) | | Acquisition-related (charges)/income | | | (396) | | | (3) | | Non-operating retirement-related (costs)/income | | | (419) | | | (1,185) | | Eliminations of internal transactions | | | (233) | | | (615) | * | Other — divested businesses | | | 477 | | | 265 | * | Unallocated corporate amounts | | | (380) | | | (283) | | Total pre-tax income from continuing operations | | $ | 6,173 | | $ | 6,908 | |
* Recast to conform to 2019 presentation.
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