The International Business Machines Corp. (IBM) edged past Wall Street estimates for quarterly revenue, bolstered by higher demand for its cloud services, a business it is staking its future on as it prepares to spin off one of its legacy units.
“Clients’ near-term priorities continue to include operational stability, flexibility and cash preservation, which tends to favor (operating expenses) over (capital expenses),” its Chief Financial Officer, Reuters quoted James Kavanaugh to have said.
“This is resulting in some project delays and purchase deferrals.”
Revenue from the cloud business, previously headed by Chief Executive Officer Arvind Krishna, rose 19 per cent to $6 billion in the third quarter, offsetting weakness in much of its other businesses.
The boost from the cloud business further underscores IBM’s move to focus on its high-margin open hybrid cloud and AI solutions, which together account for more than half of its recurring revenue, by spinning off its IT infrastructure services unit.
“Clients continue to balance short-term challenges and opportunities for transformation … More of my conversations with CEOs are around how they become digital businesses,” Krishna said on a post-earnings call.
IBM’s total revenue fell 2.6 per cent to $17.56 billion in the reported quarter, but was slightly above analysts’ estimates of $17.54 billion, according to IBES data from Refinitiv.
Excluding the impact from currency and business divestitures, sales declined 3.1 per cent.
