IBM Posts Gains as Customers Accelerate Shift to Cloud

IBM has jettisoned some of its legacy business to focus on the high-margin cloud computing business.

Advertisement
By Reuters | Updated: 21 July 2020 10:22 IST
Highlights
  • Revenue from the cloud business rose 30 percent to $6.3 billion
  • IBM's total revenue fell 5.4 percent to $18.12 billion
  • The company's shares rose 5 percent in after-hours trading
IBM Posts Gains as Customers Accelerate Shift to Cloud

Excluding the impact from currency and business divestitures, revenue declined 1.9 percent

International Business Machines (IBM) beat estimates for second-quarter profit on Monday and signalled that demand in its cloud computing business would get a boost as large corporations accelerate their digital shift due to the coronavirus crisis.

The company's shares rose 5 percent in after-hours trading.

IBM has jettisoned some of its legacy business to focus on the high-margin cloud computing business, an area that has seen a lot of action in recent years as companies ramp up their digital shift to boost efficiency.

"The trend we see in the market is clear. Clients want to modernise apps, move more workloads to the cloud and automate IT tasks," IBM's new boss Arvind Krishna said on a post-earnings call with analysts.

Advertisement

Revenue from the cloud business, previously headed by Krishna, rose 30 percent to $6.3 billion (roughly Rs. 47,000 crores) in the second quarter.

Krishna took over as chief executive officer from Ginni Rometty in April, while appointing former Bank of America Corp's top technology executive, Howard Boville, as the new head of the cloud business.

Advertisement

IBM's global business services unit was impacted as clients cut or delayed spending on discretionary projects due to COVID-19, CFO James Kavanaugh told Reuters. Sales in the unit fell 7 percent to $3.9 billion (roughly Rs. 29,151 crores).

While Western Europe and Asia Pacific showed a pickup in client spending during June, US, and Latin America customers pulled back as the pandemic impact got worse, Kavanaugh said.

Advertisement

"From a client perspective, our business is more concentrated in large enterprises, which in total have been relatively more stable throughout the pandemic," Kavanaugh said.

IBM's total revenue fell 5.4 percent to $18.12 billion (roughly Rs. 1.35 lakh crores), but came in above analysts' estimates of $17.72 billion (roughly Rs. 1.32 lakh crores), according to IBES data from Refinitiv. Excluding the impact from currency and business divestitures, revenue declined 1.9 percent.

Excluding items, the company earned $2.18 per share (roughly Rs. 160), above estimates of $2.07 (roughly Rs. 150).

© Thomson Reuters 2020


Why are smartphone prices rising in India? We discussed this on Orbital, our weekly technology podcast, which you can subscribe to via Apple Podcasts, Google Podcasts, or RSS, download the episode, or just hit the play button below.

Affiliate links may be automatically generated - see our ethics statement for details.
 

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

Further reading: IBM, Earnings Call, Cloud Computing
Advertisement

Related Stories

Popular Mobile Brands
  1. Vivo Y400 Pro 5G India Launch Date Confirmed; Design Revealed
  2. Vivo X200 FE Global Launch Confirmed; Design Teased
  3. Switch 2 Had the Biggest-Ever Launch Week for Video Game Hardware in the US
  4. Poco F7 Launch Date, Price in India, Design and Key Features Leaked Online
  5. Oppo Reno 14 5G Series, Watch X2 Mini, Enco Buds 3, Pad SE to Launch Globally
  1. Bitget Partners UNICEF Unit to Expand Blockchain Training Across India, Other Countries 
  2. WhatsApp Reportedly Working on Ability to Scan Documents on Android Smartphones
  3. ElevenLabs Expands Eleven V3 Text-to-Speech Model With Support for 41 New Languages
  4. Vivo T4 Lite 5G India Launch Confirmed; Battery Capacity, Price Range Teased
  5. TikTok Pushes Deeper Into AI-Generated Video Ads With New Tools
  6. Apple Risks Fresh EU Charge Sheet Over App Store Curbs
  7. The Witcher 4 Will Target 60 FPS on Consoles, but Series S Will Be 'Extremely Challenging' Says CD Projekt Red
  8. Oppo Reno 14 5G Series Global Launch Teased Alongside Watch X2 Mini, Enco Buds 3 and Pad SE
  9. Microsoft Begins Testing AI Agents in Windows 11, Brings Option to Share Recall Snapshots in Europe
  10. watchOS 26 to Bring Control Center Customisation Options with User-Defined Toggles
Gadgets 360 is available in
Download Our Apps
Available in Hindi
© Copyright Red Pixels Ventures Limited 2025. All rights reserved.