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Revenue tumble tops tough year for IBM Australia

Revenue tumble tops tough year for IBM Australia

​IBM Australia reported a $31 million fall in revenue for the year ending December 2016

IBM Australia reported a $31 million fall in revenue for the year ending December 2016, while seeing a $36.5 million tumble in net profit for the period.

The latest full year financial results of IBM’s local operations top off a tough year for the global integrator, with the company coming under fire in 2016 over its role in the bungled 2016 eCensus portal project with the Australian Bureau of Statistics (ABS).

According to IBM Australia’s full-year financial filing, lodged with the Australian Securities and Investments Commission (ASIC), the company’s net profit for the year was $16,832,000 after an income tax expense of $13,850,000, a far cry from its $53,291,000 net profit for the prior year.

At the same time, IBM Australia’s revenue fell to $3.19 billion from the previous year’s $3.5 billion figure.

The company reported $821 million in revenue from sales of goods, $2.29 billion from services and $79.2 million from financing. All three revenue streams fell from the previous year’s results.

Meanwhile, IBM Australia sold IBM Global Financing Australia, a company incorporated in Australia, to IBM Global Financing A/NZ Holdings, a company incorporated in Australia, for a consideration of $180,992,000. The loss on disposal recorded in the sale comes to $15,924,000.

The financial year ending December 2016 also saw IBM reduce its local employee footprint by almost 1000 people.

The company’s employee numbers stood at 5,489 at the end of its 2016 financial year, nearly 974 people fewer than its 2015 employee footprint, which included 6,463 people as at that year’s end.

While the company spent $43 million on employee termination expenses during the 2016 financial year, this is only marginally more than what the company spent the year prior, in which it reporting spending $41.2 million on termination benefits.

However, IBM did spend substantially less on employee wages and salaries in 2016, reporting expenditure of $168.3 million, well below the previous year’s figure of $190.7 million.

IBM Australia came under fire last year due to its involvement in the 2016 eCensus project, which saw the ABS’s 2016 Census online portal fail to withstand a series of distributed denial of service (DDoD) attacks that hit on Census night, 9 August 2016.

The fallout of the incident saw IBM cop criticism from Prime Minister, Malcolm Turnbull, and prompted a Parliamentary inquiry into the 2016 Census project, ultimately resulting in the company reaching a financial settlement with the government over the incident.

In the weeks following the Census debacle, reports emerged that two senior staff had “resigned with immediate effect”.

The rumours were subsequently denied by IBM Australia representatives during the Parliamentary inquiry into the 2016 Census, with the company's representatives suggesting that none of its employees had, at the time, been removed over the incident.

While 2016 saw IBM Australia remove a large swathe of its local employee footprint, it remains unclear how many, if any, left their roles as a result of the 2016 eCensus incident.

The company has since launched legal action in the NSW Supreme Court against Nextgen Networks and Vocus Communications over the companies’ respective roles in the troubled 2016 eCensus portal project.

In a legal action filed with the NSW Supreme Court late last year, IBM Australia alleges that Nextgen Networks and Vocus Communications were negligent and in breach of contract in relation to their work associated with the 2016 eCensus portal.

The court documents also reveal that IBM wants Nextgen Networks to pay for the settlement it reached with Australian Government, alleging that Nextgen Networks is liable for the claim brought against IBM by the ABS.

While the value of the settlement has not been disclosed, it is understood to be worth millions.

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Tags censusVocusNextgen

More about Australian Bureau of StatisticsAustralian Securities and Investments CommissionIBMIBM AustraliaNextgen NetworksVocus

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