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Cloud, services fuel IBM's profit beat, robust outlook; shares jump
The company has been shifting towards the faster-growing segments to lower dependence on its traditional hardware products and reverse years of revenue declines.
"We had our strongest signings quarter to finish out the year in a long period of time, where we signed roughly $16 billion worth of signings - that`s up 21 percent," Chief Financial Officer James Kavanaugh told Reuters.
"We had 16 deals greater than a $100 million which talks to value of our hybrid cloud, multi-cloud value proposition," he said.
IBM has been structuring its cloud strategy around helping companies stitch together their multiple cloud platforms, according to analysts, aiming not to compete head-to-head with "hyperscale" cloud providers such as Amazon Web Services
Cloud business, part of what IBM refers to as "strategic imperatives", grew 12 percent to $19.2 billion in 2018.
Underscoring the push into cloud, IBM in October agreed to buy Red Hat Inc
The company forecast adjusted operating earnings for 2019 to be "at least" $13.90 per share, while analysts on average were expecting $13.79, according to IBES data from Refinitiv.
However, IBM, guided 2019 free cash flow below analysts` expectation. The company expects free cash flow of about $12 billion for the year, compared with expectations of $12.67 billion.
IBM said revenue slipped to $21.76 billion in the three months ended Dec. 31, but came in above analysts` average estimate of $21.71 billion.
Throughout the year, the strengthening of the dollar cost over $2 billion of revenue in 2018, Kavanaugh said.
The Armonk, New York-based technology services giant makes over 60 percent of its revenue from outside the United States.
The company`s cognitive software business, which houses artificial intelligence platform Watson, analytics and cybersecurity services, reported sales of $5.46 billion, compared with analysts` expectation of $5.25 billion.
IBM`s revenue of $4.32 billion from its global businesses services segment also beat estimates of $4.15 billion.
Excluding special items, the company earned $4.87 per share, above expectations of $4.82.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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