Service Provider Cloud

Cloud Pays for IBM, But Not Enough for Wall Street

IBM's shift to high-growth businesses such as the cloud has begun to get results, as the company beat analyst estimates for quarterly revenue.

IBM Corp. (NYSE: IBM) has been moving toward areas it calls "strategic imperatives," such as the cloud, security software and data analytics while cutting lower-margin businesses such as its traditional hardware.

In earnings reported Monday, IBM reported revenue down 4.6% to 18.68 billion, its 16th straight quarter of revenue decline.

That's the bad news.

Good news: IBM beating analyst estimates of $18.29 billion, and revenue from strategic imperatives, which also include mobile, and social, increased about 14%. Cloud alone increased 34%.

IBM earned $2.35 per share, beating average analyst estimate of $2.09.

Strategic imperative improvement wasn't enough for Wall Street: IBM traded at $144.67, down 5% in after hours trading Monday.

While strategic imperatives are growing, they're not doing it faster than overall revenue is declining. IBM is like a stalled jumbo jet heading to the ground -- if it can restart its engines in time, it's in for a long, glorious cruise. If not -- well, Bette Davis said it.

— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, West Coast Bureau Chief, Light Reading.

Sign In