IBM CEO Arvind Krishna speaks at a panel session on the World Economic Forum in Davos, Switzerland, on Jan. 17, 2023.
Stefan Wermuth | Bloomberg | Getty Images
IBM reported quarterly revenue on Wednesday that topped analysts’ estimates, driven by higher-than-expected growth in the corporate’s software and infrastructure segments. Here’s how the corporate did:
- Earnings: $3.60 per share, adjusted, vs. $3.60 per share as expected by analysts, based on Refinitiv.
- Revenue: $16.69 billion, vs. $16.4 billion as expected by analysts, based on Refinitiv.
Analysts had expected IBM’s total revenue to say no for the primary time in two years, however it ended up being flat, based on an announcement. Net income rose 16% to $2.71 billion.
On Tuesday Microsoft highlighted a slowdown in recent business in December, but IBM CEO Arvind Krishna said he was not seeing that pattern.
“I see that our clients do need to do recent development,” Krishna said.
The corporate plans to chop around 3,900 jobs, representing 1.5% of IBM’s workforce, CNBC confirmed. Bloomberg reported earlier on the cuts. IBM said it expects to record a first-quarter charge of $300 million tied the spinoff of Kyndryl, its managed infrastructure business, and the divestiture last yr of its Watson health-care unit.
IBM’s software segment posted $7.29 billion, which works out to just about 3% growth and above the $7.12 billion consensus amongst analysts polled by StreetAccount.
The corporate picked up $4.77 billion in revenue from consulting, up 0.5% and barely lower than the $4.8 billion consensus from StreetAccount.
IBM’s infrastructure segment generated $4.48 billion, up almost 2% and greater than the $4.18 billion StreetAccount consensus. Revenue from IBM’s Z Systems line of mainframe computers jumped 16% after the Z16 model became generally available last May.
With respect to guidance, IBM called for 2023 revenue growth in constant currency — Jim Kavanaugh, IBM’s finance chief, said on a conference call that it could be prudent to expect it to be on the low end of its model for mid-single-digit revenue growth — and around $10.5 billion in free money flow. In 2021, IBM announced a goal of delivering $35 billion in free money flow between 2022 and 2024, and in 2022 free money flow totaled $9.29 billion.
The corporate can be lengthening the useful lifetime of servers and networking equipment, starting Jan. 1, which can boost pre-tax income by over $200 million, Kavanaugh said. Amazon and Microsoft have previously made similar changes.
Throughout the quarter, IBM revealed a plan to speculate $20 billion in Latest York’s Hudson Valley area over the course of a decade. The corporate also announced a next-generation quantum computer featuring 433-qubits and the acquisition of Octo, one in every of a handful of consulting firms IBM has absorbed since spinning out Kyndryl in 2021.
IBM outperformed its tech peers in 2022, the worst yr for the Nasdaq since 2008. IBM rose 11% last yr and was one in every of only two U.S. tech firms valued at $50 billion or more to notch gains. The opposite was VMware, which agreed in May to be acquired by Broadcom for $61 billion.
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