IBM's Revenue Growth in Latest Period Beats Wall Street Expectations
By Maria Armental
International Business Machines Corp. posted higher revenue
ahead of a 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.
IBM still expects revenue to grow this year and anticipates $11
billion to $12 billion in adjusted free cash flow for the year.
IBM shares rose more than 4% in after-hours trading. The stock
is up about 11% in the past 12 months.
Mr. Krishna, in the top job a year, has pledged to restore
growth at IBM this year after a prolonged period of stagnation.
"Strong performance this quarter in cloud, driven by increasing
client adoption of our hybrid cloud platform, and growth in
software and consulting enabled us to get off to a solid start for
the year," Mr. Krishna said in a statement, adding: "While we have
more work to do, we are confident we can achieve full-year revenue
growth and meet our adjusted free cash flow target in 2021.
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. In the latest quarter,
total cloud revenue rose about 21% to $6.5 billion.
IBM has undertaken a number of acquisitions to bolster both
areas, including the purchase 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
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
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
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
Write to Maria Armental at firstname.lastname@example.org
(END) Dow Jones Newswires
April 19, 2021 17:04 ET (21:04 GMT)
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