International Business Machines Corp, in last week, reported a drop in company’s first-quarter revenue that came bigger than what analysts were expecting, as slowing demand for its mainframe computers as well as stronger dollar position impacted the revenue to drop.
Except the cloud business unit, which is main point of focus of technology giant’s turnaround strategy; all of the main units of IBM remained failed to beat revenue estimates by analysts.
Business in cloud and cognitive segment of IBM, with cybersecurity, artificial intelligence and analytics as its sub segments, though declined by 1.5 percent to $5.04 billion in the reported quarter but came above the estimates of $4.18 billion by FactSet.
Company saw good acceleration in its cloud business and with that now have an improving trajectory to move forward with, Chief Financial Officer Jim Kavanaugh said.
Under the leadership of Ginni Rometty, IBM remained shedding many of its traditional but slow-pace hardware businesses and strengthens its position in growth areas through acquisition deals like Red Hat Inc, which IBM acquired for $34 billion.
IBM showed a take off in its growth strategy, by making annual revenue came growing again in the last quarter of 2018.
In the reported quarters, IBM’s systems segment, which includes its mainframe computer business, dropped by 11.5 percent to $1.33 billion, missed FactSet estimates of $1.37 billion.
Company’s overall revenue slid by 4.7 percent to $18.18 billion in the quarter ended on March 31 and that remained below the average analyst estimate of $18.46 billion, according to IBES data from Refinitiv.
Net Income for the first quarter dropped to $1.59 billion or $1.78 per share in the first quarter which was $1.68 billion or $1.81 per share in the same quarter a year ago.
IBM’s, excluding special items, earnings of $20.25 per share came above the analysts’ expectation of $2.22 per share.