IBM’s share up 7 percent, quarterly revenue is disappointing

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IBM saw its share price rise significantly today – by as much as seven percent. This is despite the fact that the company’s fourth quarter performance was worse than in the previous quarter. However, the higher rate can easily be explained: IBM’s performance was better than expected despite the decline in revenue.

IBM reported that it had posted a turnover of 21.8 billion U.S. dollars last quarter. That is three percent less than the same quarter a year earlier. According to CFO James Kavanaugh, this was due to the fact that exchange rates had changed negatively and that the quarter a year ago was exceptionally good for IBM’s mainframe computers. Although sales fell, the company still performed better than predicted, with analysts expecting sales of $21.75 billion.

Good results

However, Intel also achieved good results when it comes to annual sales. In 2018, the company converted a total of $79.6 billion, 1 percent more than a year earlier. Perhaps this combination ensures that shareholders remain enthusiastic about the company. Earnings per share were also higher than expected last year: 13.81 dollars against 13.78 dollars per share.

CEO Ginni Rometty stated in a statement that the growth shows an increasing demand for our services and leading solutions in the hybrid cloud, AI, analytics and security. Others from IBM also emphasized the positive aspects of sales. For example, 39.8 billion dollars – almost half of the total turnover – appeared to come from strategic imperatives. These include analytics, cloud, mobile and social; all areas where IBM wants to put more emphasis.

Disappointing cloud results

Somewhat disappointing are the cloud results that IBM booked. Over the year, the company generated $19.2 billion in revenue from its cloud operations. That is twelve percent more than in 2017, but a growth that is less than that of 2016. In addition, it is much less growth than market leaders Amazon Web Services, Microsoft and Google booked.

Analysts fear that IBM will not be able to keep up with these competitors. However, Kavanaugh stressed that, despite disappointing growth, the company focuses on specific cloud aspects. This means that IBM does not directly compete with AWS, but focuses on complex, valuable workloads that also have to go to the cloud.

This news article was automatically translated from Dutch to give a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.