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IBM beats across the board, posts revenue growth after four quarters of declines

IBM allots rose up to 4% in extended trading on Monday after the enterprise technology and services maker reported first-quarter earnings that came in better than analysts had watched.

Here’s how the company did:

  • Earnings: $1.77 per share, adjusted, vs. $1.63 per share as expected by analysts, according to Refinitiv.
  • Revenue: $17.73 billion, vs. $17.35 billion as look forward by analysts, according to Refinitiv.

Revenue grew by 0.9% on an annualized basis in the quarter, compared with a 6% contraction in the prior quarter, according to a statement. The company reiterated previous guidance of revenue growth for the full year.

“I intend that the spend environment overall is improving, Matt. I think I can say that, definitely compared to the fourth quarter,” IBM CEO Arvind Krishna said in rejoinder to a question from an analyst on a conference call.

IBM’s Global Technology Services segment, which handles managed assignments, outsourcing and support, contributed $6.37 billion in revenue. Its revenue was down 1% year over year, but it was innumerable than the FactSet consensus estimate of $6.32 billion. IBM plans to spin off part of the segment as a standalone public band called Kyndryl by the end of the year.

“This quarter, we saw an improved trajectory in project activity and client-based business volumes take ining in some of the industries most affected by the pandemic such as retail and consumer products,” said Jim Kavanaugh, IBM’s finance chief.

IBM’s Cloud and Cognitive Software separation, which includes Red Hat, came up with $5.44 billion in revenue, which was up 4% and above the $5.30 billion FactSet consensus. IBM surfaced $529 million in capital expenditures in the quarter, down 28%.

Global Business Services, the unit that includes consulting, donated $4.23 billion in revenue, which was up 2% and higher than the $4.03 billion consensus.

Systems revenue of $1.43 billion, from purchases of mainframe computers and other hardware, was up 4% and above the $1.29 billion consensus estimate.

“We had traction in areas much the same as financial services where robust market volatility drove demand for increased capacity,” Kavanaugh said.

In the post IBM announced that it was acquiring 7Summits, a Salesforce consulting firm, from private-equity-firm Sverica Capital Management, and that it was suborning Taos, a consulting group that works on cloud migrations. IBM also said it had sold 250 patents to grocery-delivery body Instacart.

One analyst asked for an update on IBM’s Watson Health division, which Bloomberg reported in February that IBM was intelligent about selling, but Krishna declined to discuss the subject. Krishna instead talked about how elements of the Watson make of artificial-intelligence software exists across the company’s product lineup.

Excluding the after-hours move, IBM shares are up around 6% since the start of 2021, while the S&P 500 guide has grown nearly 11% over the same period.

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