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Did Any Geography Report Revenue Growth in IBM’s Fiscal 1Q16?

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Latin America, especially Brazil, weighed heavily on IBM’s fiscal 1Q16 results

Earlier in the series, we looked at IBM’s (IBM) recently announced fiscal 1Q16 earnings. In this part, we’ll look at IBM’s performance in fiscal 1Q16 across various geographies.

As you can see in the chart below, the Americas and EMEA (Europe, the Middle East, and Africa) failed to report any growth in fiscal 1Q16.
IBM stated that Latin America (ILF) continued to prove difficult for IBM in 1Q16. The volatile economic and political climate in Brazil was primarily attributed to this decline. SAP AG (SAP), in its preliminary fiscal 1Q16 earnings release, blamed the lack of political and economic stability in Latin America, especially Brazil, for its performance.

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There’s a series of problems for Brazil (EWZ) that haven’t been resolved. They include spiraling unemployment, high inflation, political turmoil, stagnant economic growth, high fiscal deficit, deep recession, and downgrades from rating agencies. The country’s economy is continuing its downturn due to a slide in commodity prices and political and economic instability.

Asia-Pacific was the only geography that grew in fiscal 1Q16

Among all of IBM’s geographies, Asia-Pacific was the only one that reported growth (1%) on a constant currency basis. As the above chart shows, Japan’s continued growth contributed to IBM’s growth in the Asia-Pacific region. The first quarter of 2016 marked the 14th consecutive quarter in which Japan (EWJ) continued to post revenue growth.

Asia-Pacific continues to draw technology players due to its growth opportunities. Fortinet (FTNT), a major network security company, and Salesforce (CRM) are some technology players focused on the Asia-Pacific region.

In the next part, we’ll see if IBM’s growth in Asia-Pacific is good news for Watson.

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