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Tech giant IBM (NYSE:IBM) reported its Q4 2015 earnings on 19th Jan, with higher than expected EPS and revenues figures. However, it issued a disappointing guidance that sent the IBM stock 4% down. In an earlier article outlining focus areas for the IBM earnings release, I mentioned that while most sell-side shops have downgraded IBM, investors are still looking for signs of an upcoming bottom in IBM’s decline.

On the bright side, IBM delivered $22.06B in revenues, which is slightly higher than the street’s consensus for $22.02B in revenues, and an adjusted EPS of $4.84, compared with the $4.81 that was expected. Q4 has been, historically, IBM’s best quarter revenue-wise, and Q4 2015 did not break that trend. However, the disappointing 2016 guidance indicates to investors that this year will be another challenging year for the shareholders.

For some years, IBM had been in a process of fundamental change in its business when it started to ramp up its strategic initiatives, such as cloud and analytics, while trying to maintain the rest of the business. As shown in the recent earnings releases and as the IBM stock performance indicates, IBM had a partial success in running this transition smoothly, and revenues have continued to decline YoY. Even though IBM beat analysts’ expectations in Q4 2015, its top-line reflect an 8.5% decrease YoY, and annual 2015 figures reflect a 12% drop in annual revenues.

The best measure that reflects the great transition that IBM is going through these days is the impact of the impressive growth of the company’s strategic imperatives on the total financial results. In 2015, IBM generated an incredible $28.9B in revenues from its cloud, analytics, mobile, social, and security sectors, which is 26% higher year-over-year. As shown in the chart below, every sub-segment of IBM’s strategic imperatives grew significantly in 2015 when analytics and cloud services accounted for the vast majority of the company’s revenues. However, other sub-segments, such as security and mobile, which are rapidly growing industries, generated tiny revenues, and many of the acquisition speculations that involve IBM relate to these segments.