IBM quarterly results outperform estimates as restructuring shows progress
IBM (IBM) posted first-quarter earnings late on Tuesday, beating expectations for the top and bottom lines as the tech giant continued to make progress on its major restructuring. IBM stocks rose on this news.
The company reported adjusted earnings of $ 1.40 per share on earnings of $ 14.2 billion. Analysts expect IBM to report revenue of 3 1.38 $ 13.85 billion.
IBM stock rose 2.4% to 132.25 during today’s hourly trading on the stock market.
The revenue has increased by 8% or 11% in fixed currency as compared to the previous year.
Switch to the hybrid-cloud platform
IBM is undergoing a significant, multi-year restructuring. It focuses on open, hybrid cloud-computing platforms in addition to artificial intelligence.
Hybrid cloud architecture means IBM can provide its customers with both public cloud and private cloud. Leaders in the public cloud space include Amazon (AMZN) and Microsoft (MSFT).
“Demand for Hybrid Cloud and AI led to an increase in both software and consulting in the first quarter,” said Arvind Krishna, President and CEO of IBM, in a written commentary with the release of IBM Earnings. “Today we are a more focused business and our results reflect the implementation of our policy. We have made a solid start to the year and now we see revenue growth for 2022 at the peak of our model.”
Hybrid cloud revenue in the first quarter at $ 5 billion, up 14%. IBM’s software group reported revenue of 8 5.8 billion, up 12%. 18% increase in Red Hat revenue
The company now expects higher-end currency revenue growth in the mid-single digit range, IBM said. It expects an additional 3.5 point contribution from the increased sales in Kyndryl.
Business shifts hit IBM stocks
Major business changes have helped explain why IBM is struggling to grow its revenue and earnings.
“As it is already lagging behind in the public cloud, IBM is making big bets on the so-called hybrid cloud,” said Daniel Morgan, senior portfolio manager at Synovas Trust, in a note to clients.
“The opportunity for hybrid cloud is significantly greater, as legacy enterprises have recently begun to shift their workloads to the cloud during internal IT system upgrades,” Morgan said.
IBM is committed to $ 20 billion in mergers and acquisitions by 2024, focusing on software.