Seeking Alpha

SEC investigating IBM's cloud revenues; Big Blue says it's cooperating

  • From IBM's Q2 10-Q: "In May 2013, IBM learned that the SEC is conducting an investigation into how IBM reports cloud revenue.  IBM is cooperating with the SEC in this matter."
  • No details are provided about the nature of the SEC's concerns. However, it's worth noting companies tend to receive payment for cloud software/services subscriptions up-front, and recognize this revenue over the life of the contract. The timing of such revenue recognition can present some accounting issues.
  • It was only last week that a federal court approved a settlement between IBM and the SEC over Chinese/Korean bribery allegations. A DOJ bribery investigation remains outstanding.
  • Shares -1.1% premarket.
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