Margins decreased considerably year over year, and this seems to be the root cause. A whopping 83% increase in total expenses year over year for the most recent quarter end. The Company will have to do a much better job at controlling its costs moving forward in order to increase margins and profitability.

The Company puts an intersting spin here on the data. While total revenues for continuing operations were down 12% for the most recent quarter, year over year, revenues were flat when adjusting for currency and divested businesses. IBM is a global company and will always have currency risk, it needs to do a better job at hedging its currency exposures moving forward through the use of derivatives, and not exclude it to make the numbers look better.

These are impressive growth numbers the Company is reporting here, with gross mobile revenue increasing by 69% year over year, however, the most important number here is that mobile only represents 21% of traffic driven revenue for the Company for the most recent quarter, an increase from 14% for the prior year comparable time period. The Company must be able to keep up with its competitors in the mobile arena if it wants to compete in the future, and return itself to "iconic greatness".

The Company displayed impressive growth with these quarterly figures. Revenues increased 27.2% from the prior year comparable quarter, and net income increased 33.3% year over year. Net Profit Margin was 23.4% for the recent quarter, up 4.8% from the prior year's figure of 22.4%. It seems the Company is poised to have a strong fiscal year given these numbers.

The Company's sales revenues lost 700 basis points (7% points) due to unfavorable foreign exchange rates, which is a material amount at $1.3 Billion. The Company needs to do a better job at hedging its currency exposures via derivatives/other hedging strategies, as it continues to expand globally, if it wants to remain as successful as it is today.

When a Company does share repurchases, it often indicates that management believes that its current stock price is undervalued, so it would benefit the Company as well as existing shareholders to do a buyback program. This is a material buyback here for the Company.

"CVA/DVA" are complicated accounting adjustments that the Company believes need to be made in reference to its derivative transactions, which are inherently risky. Note, excluding these items is Non GAAP. "Credit valuation adjustments (CVA) on derivatives (counterparty and own-credit), net of hedges; funding valuation adjustments (FVA) on derivatives; and debt valuation adjustmItents (DVA) on Citigroups fair value option liabilities (collectively referred to as CVA/DVA). Citigroup's results of operations excluding the impact of CVA/DVA are non-GAAP financial measures."

Even though revenues increased 56.4% year over year, the Company still generated a net loss of $15.2MM on Revenues of $195.6MM. This indicates that while the Company has been able to grow its revenues, it has not been able to cover all of its expenses, both operating and capital, which has resulted in the net loss (GAAP).

First quarter revenues were down 5% year over year, and down 2% y/y on a constant currency basis. Operating cash flow (CFO) decreased 75% year over year for the first quarter. As a result of these decreases, earnings (EPS) had a slight decrease posted for the quarter. Investors always want to see revenue and operating cash flow to increase year over year, not decrease.

The Company's net profit margin, which is equal to net income divided by revenue, equaled 2.0% for the most recent quarter, a significant decrease from 14.0% for the prior year comparable quarter. Translation: Red Flag, why the large decrease in earnings year over year, on the same revenue number.

While this data seems to paint a rosy picture about the Company's credit quality of its loan portfolio, with net charge offs decreasing by 44% from the prior comparable time period, and a net charge off ratio that is at its lowest point in a decade. I would like to see how this data compares to industry averages to get a sense if 0.4% is indeed a low number.

This is a red flag for investors. The Company is stating that they have a history of GAAP net losses for the last few fiscal years, further they expect the current triple digit revenue growth rate to decline, and as costs increase, for both operations and R&D, then the Company may not be able to "achieve or sustain" a net profit. The Company's ability to control its costs, while successfully growing revenue, will be a key factor in determining future success or failure.

The Company is stating here that Gross Margin would have been approximately 26.6% (GAAP) had it not been for these significant one time items listed here, which equates to a 4% point improvement. (1%=100 Basis Points Bps)

The Company made positive gains in gross margin and operating income for the most recent quarter, good signs that the Company is going in the right direction. Gross margin improved to 44.3% for Q3 '14, up from 33.3% for the prior year. Also, the Company posted a positive operating income of $13.5 Million for Q3 '14, compared to an operating loss of $0.7 Million for the prior year. Both are impressive improvements over the prior year.

The Company's net loss grew larger year over year, from a net loss of $3.4 Million to a net loss of $4.3 Million for Q3 '14, a 21% larger net loss for the current quarter. While revenues may have increased 45% year over year, the Company is still not able to translate those revenues into profits, which will be ultimately demanded by investors at some point in the future.