September 19, 2021
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IBM stock market gains after profits show sales growth for second consecutive quarter

By on July 19, 2021 0

International Business Machines Corp. reported revenue growth for a second consecutive quarter on Monday afternoon, beating expectations and pushing shares higher amid the extended trade.

IBM IBM,
-0.71%
reported second-quarter net income of $ 1.33 billion, or $ 1.47 per share, from $ 1.36 billion, or $ 1.52 per share, a year ago. Adjusted earnings, which excludes certain acquisition costs and spin-off shares as well as pension adjustments, was $ 2.33 per share, compared to $ 2.18 per share in the prior year period .

Revenue reached $ 18.75 billion, up from $ 18.12 billion in the last quarter, a second consecutive quarter of revenue growth for a company that has long been deprived of increased sales . Analysts polled by FactSet had estimated adjusted earnings of $ 2.31 per share on revenue of $ 18.29 billion for the second quarter.

In the final quarter, IBM surprised investors with a year-over-year revenue gain, breaking a four-quarter streak of decline. Sales gains have been scarce in recent years for the tech mainstay – sales had declined year over year in all but four of the previous 34 quarters, before the first quarter increase – and investors look for signs of a reversal of this trend. year.

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“A long-term fundamental revaluation is unlikely until investors are convinced that IBM can grow at healthier rates (maybe 3% +), which can be difficult,” the analyst wrote. Bernstein Toni Sacconaghi in his overview of the report.

The company said cloud and cognitive software revenue – which includes its Red Hat unit – of $ 6.1 billion from $ 5.75 billion a year ago, when analysts expected $ 5.93 billion.

IBM agreed to acquire Red Hat in 2018 for an enterprise value of approximately $ 34 billion with the goal of building a strong hybrid cloud business, and saw former Red Hat CEO Jim Whitehurst step down from IBM’s president earlier this month.

Sacconaghi said Red Hat’s growth will be “a key area, given its importance in the [Arvind] Krishna’s growth plan, a modest deceleration in the last quarter and the recently announced departure of former CEO Jim Whitehurst.

Total cloud revenue, which comes from various business units, increased 13% to $ 7 billion from a year ago, IBM said. Global Technology Services, or GTS, posted revenue of $ 6.3 billion, up from $ 6.32 billion in the quarter last year and the Street consensus of $ 6.23 billion.

Global business services revenue was $ 4.3 billion, up from $ 3.89 billion a year ago, and Street’s forecast of $ 4.03 billion. Systems revenue was $ 1.7 billion, up from $ 1.85 billion a year ago and analysts’ expectations of $ 1.71 billion.

IBM shares rose more than 3% in after-hours trading after the report was released, after closing with a 0.5% drop to $ 138.18 on a difficult day for markets. The stock has gained 9.6% so far this year as the S&P 500 SPX Index,
-1.59%
rose 15.2% and the Dow Jones Industrial Average DJIA,
-2.09%
– which counts IBM as a component – added 13.3%.


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