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IBM Gains as Cloud Drives Best Sales Growth in 10 Years

Stock MarketsJan 25, 2022 04:47AM ET
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By Dhirendra Tripathi

Investing.com – IBM stock (NYSE:IBM) traded 2.7% higher in premarket Tuesday after increasing adoption of its Cloud and AI services drove the best quarterly sales growth at the tech giant in a decade.

These were IBM’s first results after the spinoff of its lower-margin managed infrastructure services business, now housed under Kyndryl. IBM’s legacy business had been under pressure for long as more clients shifted to Cloud and the company was slow to adopt the model. That’s now changing.

Fourth-quarter sales rose 6.5% to nearly $17 billion, an outcome of CEO Arvind Krishna’s focus on hybrid Cloud and AI services. Of this, hybrid Cloud brought $6.2 billion, up 16%. The company named Dun & Bradstreet (NYSE:DNB_old) and Volkswagen (DE:VOWG_p) as recent wins for those capabilities. It said it is partnering EY to help organizations leverage hybrid Cloud.

A hybrid model allows corporates to use outsourced Cloud-based servers as well as its own. This blended model allows clients to derive two-and-a-half-times more value, according to statements made earlier by Chairman and Chief Executive Officer Arvind Krishna.

Software revenue rose 8.2% to $7.3 billion, led by 19% growth in Red Hat as the company helped clients gain more flexibility in adopting automation. Consulting revenue was higher by 13% at $4.7 billion. Adjusted profit per share was $3.35 and beat estimates.

 

IBM Gains as Cloud Drives Best Sales Growth in 10 Years
 

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