IBM Reports Higher 1Q Revenue

By Maria Armental

International Business Machines Corp. posted higher revenue ahead of landmark split of the business this year that is part of Chief Executive Arvind Krishna's plan to revive growth at the veteran tech company.

IBM Monday said first-quarter sales rose about 1% to $17.73 billion, generating net income of $955 million. Wall Street on average expected sales of $17.32 billion and net income of $1.28 billion, according to FactSet.

Mr. Krishna, in the job almost a year, has pledged to restore growth at IBM this year after a prolonged period of stagnation. The company is preparing to spin off a major part of its information-technology services operations.

Mr. Krishna said he would focus IBM on the booming field of cloud-computing and artificial intelligence. IBM has undertaken a number of acquisitions to bolster both areas, including acquisition of software company Red Hat that closed in 2019, to strengthen its efforts in the so-called hybrid-cloud where customer mix on-site and cloud-based data storage and processing tools. IBM last week said it had agreed to buy for an undisclosed amount a small Italian company, called myInvenio, that it said would advance both its AI and hybrid cloud activities.

IBM said its total cloud revenue rose about 21% in the latest period to $6.5 billion.

The company last week said that the services business it plans to spin off by the end of this year would be called Kyndryl and be based in New York City. It will be run by IBM veteran Martin Schroeter.

The IT services operations that IBM is partly shedding were central to former Chief Executive Lou Gerstner's drive in the 1990s to transform the company from a lumbering tech giant focused on computing hardware to a huge player in services that were booming at the time. The spinoff announcement comes a few months after the Armonk, N.Y., company said it was eliminating an unspecified number of jobs.

IBM also is exploring the potential sales of Watson Health, The Wall Street Journal previously reported. The unit, which employs artificial intelligence to help hospitals, insurers and drugmakers manage their data, was once a flagship initiative for Mr. Krishna's predecessor, Ginni Rometty, isn't currently profitable, people familiar with the matter have said.

IBM stock rose 4% to $138.44 in after-hours trading.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

April 19, 2021 16:31 ET (20:31 GMT)

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