IBM Reports Loss but Higher Revenue

By Ted Greenwald and Maria Armental

International Business Machines Corp. reported its second consecutive quarter of higher revenue after nearly six years of declines, a sign that Chief Executive Ginni Rometty's slow-moving turnaround may be taking hold.

Revenue in the latest period rose 5% from a year ago to $19.07 billion. Profit fell 4% to $1.68 billion, as gross profit margin narrowed from the previous quarter.

The tech giant's shares fell 4.3% to $154.11 in after-hours trading Tuesday, after closing up 1.9%. The stock has lost 6% in the past 12 months, even as the S&P 500 index has risen 15%.

Ms. Rometty has been working to turn around IBM almost since the moment she took over from Sam Palmisano in 2012, as the emerging industry of cloud computing ate away at IBM's business of managing information technology in customers' facilities.

She has refashioned IBM as a cloud provider, seeking to differentiate the company's offerings from lower-cost competitors through buzzy technologies such as its artificial-intelligence tools and blockchain, a decentralized way to execute and track transactions.

IBM expects these offerings, which it calls strategic imperatives, to grow more rapidly than its legacy businesses are shrinking, propelling IBM to faster revenue growth as they come to constitute a bigger portion of overall sales.

The company said strategic-imperatives revenue reached $37.7 billion, making up 47% of revenue over the last 12 months, and remains on track to reach $40 billion by the end of the year.

"The overarching message," said IBM finance chief James Kavanaugh, "is that we grew revenue, stabilized our gross margin across all our lines of business and grew operating profit, cash, and earnings per share. So a good start to the year, overall."

(END) Dow Jones Newswires

April 17, 2018 16:34 ET (20:34 GMT)

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