IBM Chairman and CEO Arvind Krishna appears at a panel session at the World Economic Forum on January 17, 2023 in Davos, Switzerland.
Stephen Vermouth | Bloomberg | Getty Images
IBM On Wednesday, it reported second-quarter earnings that topped analysts’ estimates as the company expanded its gross margin. Revenue missed the consensus estimate.
IBM shares were little changed in extended trading after the report.
How the company did it:
- Income: $2.18, adjusted, versus $2.01 per share expected, according to Refinitiv.
- Income: $15.48 billion, versus $15.58 billion expected, according to Refinitiv.
Net income for the quarter rose 13 percent to $1.6 billion from $1.4 billion, or $1.72 per share, a year earlier. IBM’s adjusted gross margin of 55.9% was higher than the Street account estimate of 54.7%. Revenue was virtually flat from a year ago.
In a statement, IBM CFO James Kavanaugh attributed the company’s increased gross margin to a more profitable mix of products — software was the company’s fastest-growing division — as well as “productivity initiatives.” IBM 3,900 job cuts announced As part of a broader decline in the tech sector in January.
IBM reiterated on Wednesday that it expects revenue to grow between 3% and 5% by the end of the year in constant currency. The company forecasts free cash flow of about $10.5 billion in 2023.
Intel’s largest division, its software division, reported sales of $6.6 billion, up 7 percent from a year earlier. Software includes products such as its Red Hat Linux operating system and security software.
The division’s fastest-growing segment was data and artificial intelligence products, up 10 percent from a year ago.
In May, IBM billed WatsonX as a development studio to “train, tune and deploy” machine learning models for companies, 15 months after the company sold its Watson Health unit.
CEO Arvind Krishna referred to the importance of AI several times in a prepared statement.
“We continue to respond to the needs of our clients looking for trusted, enterprise AI solutions, and we are particularly excited about the response to the recently launched WatsonX AI platform,” said Krishna.
IBM’s consulting segment grew nearly 6 percent year over year to $5 billion in sales.
The company’s infrastructure division, which includes its mainframe sales, saw revenue fall 14.6 percent to $3.6 billion. The decline was due to lower revenue from its Z Systems servers, which were down 30%.
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Source by [CNBC News]
