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IBM doing a little better than expected

by on18 October 2016


Cloud helps out

The ever shrinking Biggish Blue posted better-than-expected third-quarter revenue thanks to its moves to the cloud and analytics businesses.

Since Ginni Rometty took over IBM, the outfit has attempted to shift toward more profitable areas, such as cloud services, artificial intelligence, analytics, and security. Meanwhile it has killed off its traditional hardware and services businesses.

Revenue from those areas, which the company calls "strategic imperatives," rose 16 percent to $8 billion in the third quarter. Cloud revenue jumped 44 percent compared with a 30 percent rise in the second quarter, it said.

Curiously though, shareholders were not that impressed and were more concerned about the fact the company had reported its 18th straight quarter of declining revenue. Shares were down 3.1 percent at $150.60 in after-market trading.

IBM has made a string of acquisitions focused on elements of its strategic imperatives business, including The Weather Company and Truven Health, spending $5.45 billion so far this year. IBM spent $821 million on acquisitions in the same period last year.

IBM's operating gross margin fell 2.1 percentage points to 48 percent in the quarter, as a result of higher investments in the company's cloud business and the shift to a subscription-based as-a-service model.

The company's revenue marginally fell to $19.23 billion in the quarter ended 30 September from $19.28 billion a year earlier, but beat the average analyst estimate of $19 billion. Net income fell to $2.85 billion from $2.95 billion.

 

Last modified on 18 October 2016
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