IBM sees over $7 billion in cloud, SEC probes

The Securities and Exchange Commission, the US capital market regulator, is investigating into how International Business Machines Corp (IBM) reports revenue from its cloud computing business, the company said on Wednesday.

IBM, which made the disclosure about its cloud income in its quarterly report filed with the SEC, however, did not provide separate details of the business.

The company's quarterly report also said it aimed to generate $7 billion annually in revenue from cloud services by the end of 2015.

IOBM did not give details of the SEC probe, but merely said it learned of the investigation in May. There were no reports from SEC either.

Income from cloud computing could go up depending on how companies are able to rent computing power, storage and other services from data centers to customers and they may project as much income from cloud computing as they plan or aim at.

IBM also has no separate income recognition policies for the software, server, storage, network or databases used in different layers of the cloud computing business.

The current probe is unlikely to affect IBM as estimates of revenue generation from cloud computing, which is still at its nascent stages, could also be 'cloudy'.

IBM, however, is expanding its footprint in the cloud computing business with $2 billion acquisition of SoftLayer Technologies in June alone.

Meanwhile, the department of justice is investigating allegations of illegal activity by a former IBM employee in Poland, as well as transactions in Argentina, Bangladesh and Ukraine to ensure the company's global compliance with the Foreign Corrupt Practices Act.

Last month IBM expanded its cloud offerings with the $2 billion acquisition of SoftLayer Technologies.

IBM, on 25 July, settled two charges of foreign bribery after a federal judge signed off on a 2011 settlement the company made with US regulators.

IBM had, in March 2011, agreed to pay $10 million to resolve charges over improper gifts to government officials in South Korea and China.

IBM said it was cooperating with the SEC investigation.