Menu
Cloud growth fuels IBM profit beat

Cloud growth fuels IBM profit beat

Storage business meanwhile falls by 20 per cent

Credit: Dreamstime

IBM beat analysts’ estimates for second-quarter profit this week, propped up by recurring growth in its high-margin cloud business.

The company is relying on its cloud business in the face of slowing growth in its legacy businesses, including mainframes and storage systems.

Last week, it wrapped up its US$34 billion acquisition of Linux maker Red Hat Inc, its biggest deal so far, to expand its subscription-based software offerings.

Revenue from cloud business, the faster-growing service and a key metric for the company, grew 5 per cent to US$4.8 billion during the quarter.

However, a stronger dollar dragged down its revenue by about $500 million. IBM makes over 60 per cent of its revenue from outside the United States.

IBM’s Global Technology Services unit, its biggest business by revenue that includes infrastructure, cloud and technology support services, reported a 6.7 per cent drop in revenue to US$6.84 billion, missing analysts’ estimates of $6.92 billion, according to three analysts polled by Refinitiv IBES.

The company’s systems business, which includes its mainframe servers and storage hardware, fell 19.5 per cent to US$1.75 billion.

Total revenue slipped 4.2 per cent to US$19.16 billion, in line with analysts’ estimates of $19.16 billion.

The decline in revenue could be attributed to weakness in the company’s legacy business of selling hardware, Chief Financial Officer James Kavanaugh told Reuters.

IBM said it remained on track to achieve adjusted earnings of at least US$13.90 for 2019, excluding the impact of Red Hat, in-line with analysts’ expectations.

The company added that it would provide an update on 2019 adjusted earnings, including impact from Red Hat on Aug 2.

The company’s net income rose to US$2.50 billion, or US$2.81 per share, in the second quarter ended June 30 from US$2.40 billion, or US$2.61 per share, a year earlier.

On an adjusted basis, the company earned US$3.17 per share, beating estimates of US$3.07.

Reporting by Sayanti Chakraborty in Bengaluru; Editing by Anil D'Silva



Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags IBM

Events

Why experience is the new battleground for partners

Join us for an exclusive webinar, in association with Hewlett Packard Enterprise and Technology Services Industry Association (TSIA) and learn about the latest industry insights and how technology services continue to evolve to deliver differentiated value, and how partners can be successful in 2021 and beyond.

Featured

Slideshows

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

Hundreds of leaders from the New Zealand IT industry gathered at the Hilton in Auckland on 17 November to celebrate the finest female talent in the Kiwi channel and recognise the winners of the Reseller News Women in ICT Awards (WIICTA) 2020.

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards
Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

The leading female front runners of the New Zealand ICT industry joined together for the annual Reseller News Women in ICT Awards event at the Hilton in Auckland, during which hundreds of guests celebrated 13 outstanding individuals who won awards, chosen from more than 50 finalists representing over 30 organisations.

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards
Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

More than 500 channel leaders gathered in Auckland on 21 October at the ​Reseller News Innovation Awards ​2020 to celebrate the achievements of the New Zealand technology industry's top partners, start-ups, vendors, distributors and individuals.

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners
Show Comments