IBM marks strong start to new chapter as cloud revenue booms
Reuters
Published Jan 24, 2022 04:14PM ET
Updated Jan 24, 2022 06:30PM ET
By Chavi Mehta
(Reuters) -IBM on Monday beat Wall Street estimates for revenue in the fourth quarter, as its focus on the cloud paid off in Big Blue's first earnings after exiting the slow-growing managed infrastructure business.
Shares of the IT giant jumped as much as 7% aftermarket before easing to trade flat, with the company reiterating its forecast for mid-single-digit revenue growth in 2022, compared with 3.9% last year.
"This will be the first quarter where you'll see what today's IBM (NYSE:IBM) looks like, and that is a higher revenue growth company," Chief Financial Officer James Kavanaugh told Reuters in an interview.
The 110-year-old company has doubled down on the software and consulting businesses after shedding its former managed infrastructure unit in November following years of growth and margin pressures.
Revenue at IBM's consulting business rose 13.1%, while cloud revenue jumped 16% to $6.2 billion in the quarter.
With cloud adoption surging worldwide, the company has shifted its focus to the so-called "hybrid-cloud", where enterprises use a combination of their own data centers and leased computing resources to store and process data.
U.S. revenue rose in the mid-single digits during the quarter even as the Omicron variant raged across the country, Kavanaugh said, adding that industries hit hard early by the pandemic were bouncing back.
IBM's revenue rose 6.5% to $16.7 billion, adjusted for the separation of the managed infrastructure services business, now Kyndryl. Analysts on average had expected $15.96 billion, according to IBES data from Refinitiv.
"IBM hasn't had this kind of result and with the spin-off, a lot of this sentiment was that it was going to take a few quarters for this to flush out," Futurum Research analyst Daniel Newman said.
Excluding items, IBM earned $3.35 per share, beating estimates of $3.30.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.