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What are the positives and negatives of IBM's second-quarter earnings?

Grace A


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The second-quarter earnings announcement by International Business Machines Corp. (NYSE:IBM) was a mixed bag although the tech giant beat Street estimates on a number of parameters.

Beginning with the positives,

  • IBM’s net income of $2.5bn in the second quarter at $2.81 a share came in higher than the $2.4bn at $2.61 a share a year earlier.
  • Revenues from the cloud, cognitive and business services rose and were either in line or better than analysts forecast.
  • The company’s acquisition of Red Hat, expected to close on 2nd August is likely to boost its cloud and services growth, going forward.
  • The company also reiterated its full-year adjusted earnings guidance of $13.90 a share, in line with Street estimates.

On the negatives,

  • IBM recorded the fourth straight quarter with negative revenue growth.
  • The tech giant’s total revenue fell to $19.16bn from $20bn the previous year, largely led by a more than 6.5% drop in the firm’s largest business segment, global technology services. Analysts were expecting IBM to report total revenue of $19.17bn.

IBM has gained 25.86% year to date and the stock is poised to open with losses of more than a per cent on the NYSE on Thursday.

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