IBM CEO Ginni Rometty has released her annual Chairman’s Letter to the company’s shareholders, telling them that last year was “a critical year of transformation” for the company, yet much work remains to be done.

In the letter, Rometty noted the company’s disappointing financial results reflected this period of transition, but she said it was necessary in order to “pursue a model of high-value innovation, rather than commodity technology, products and services”.

Rometty’s admission comes after IBM posted its eleventh consecutive quarter of sales declines, with revenue falling by almost 12 percent from a year ago to $15.9 billion in the fourth quarter. Annual revenues for 2014 were $61 billion, down from almost $71 billion in 2011. IBM also posted a decline it its net income, down 11 percent to $3.6 billion in the last quarter.

“Our choice is clear: We pursue a model of high-value innovation, rather than commodity technology, products and services,” Rometty wrote. “Our commitment to this model compels us to reinvent businesses continually; grow new ones organically and through acquisitions; and occasionally divest businesses that do not fit our profile.”

“You see all of this reflected in our 2014 results,” she continued. “A dynamic shift of our portfolio underneath our $92.8 billion in revenue, $21 billion in operating pre-tax income and operating earnings per share of $16.53 from continuing operations.”

But Rometty remained confident the company’s fortunes would soon pick up, saying that its investments in 2014 – namely Watson and Bluemix, and its $1.2 billion global SoftLayer data centre expansion – would soon spark a turnaround.

“These investments will contribute to the strong growth we are seeing in our strategic imperatives, which deliver high value and now represent a significant part of IBM,” Rometty wrote. “Together, cloud, analytics, mobile, social and security generated $25 billion of revenue in 2014, growing byIBM watson 16 percent. Five years ago, these businesses represented just 13 percent of our revenue. Today, that has risen to 27 percent of IBM’s revenue.”

Rometty pointed out quite a few more reasons to be optimistic too, including IBM’s current strategic initiatives, which she said generated $25 billion in the last year, and are growing at a far faster rate than other market segments.

She also noted a “services backlog of $128 billion”, which is likely to become higher-margin in future as the firm deploys “advanced automation to delivery.”

Despite IBM’s struggles, it does at least continue to reward its shareholders handsomely.

“In 2014 we marked our 19th consecutive year of raising our dividend and our 99th year of paying one,” Rometty noted, an achievement that few other companies can claim.

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