IBM Benefits from Strong Demand for Cloud Services

International Business Machines Corporation (IBM) today released its fourth-quarter 2021 financial report. Benefiting from strong demand in the cloud business, it outperformed Wall Street expectations. The stock price rose 7% after the market.

IBM’s shift from slow-growing infrastructure management services to the cloud is paying off, with mid-single-digit revenue growth forecast for full-year 2022.

“You’re going to see a changed first quarter for IBM, which is a business with higher revenue growth,” IBM Chief Financial Officer James Kavanaugh told Reuters in an interview.

IBM’s original infrastructure management services unit has faced growth and profitability pressures for years, and the 110-year-old tech giant split last November to focus on software and consulting.

Revenue from IBM’s consulting business rose 13.1 percent year-on-year in the last quarter, while revenue from its cloud computing business rose 16 percent to $6.2 billion.

As cloud applications become more widespread around the world, IBM has shifted its focus to what it calls a “hybrid cloud” business, in which companies rent computing resources to store and process data in addition to using their own data centers.

Kavanaugh said IBM posted mid-single-digit revenue growth in the U.S. last quarter despite the COVID-19 (coronavirus disease 2019) Omicron variant ravaging the U.S. He also said that industries that were hit hard at the beginning of the epidemic are continuing to recover.

IBM’s fourth-quarter revenue rose 6.5 percent to $16.7 billion. Analysts on average had forecast $15.96 billion, according to the International Brokerage Estimation System (IBES) from Refinitiv.

Excluding certain items, IBM’s adjusted earnings per share (EPS) came in at $3.35, beating consensus estimates by $3.30.

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Summary

International Business Machines Corporation (IBM) today released its fourth-quarter 2021 financial report. Benefiting from strong demand in the cloud business, it outperformed Wall Street expectations. The stock price rose 7% after the market.

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