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IBM Returns to Full-Year Revenue Growth

"We've got some pluses and minuses at the top line"

By CBR Staff Writer

IBM, for six long years dogged by persistently falling revenues, gained a head of steam in 2018, reporting Q4/full-year results late Tuesday that beat analyst expectations and sent shares ratcheting upwards.

Some standouts: a 52 percent rise in consolidated net income to $8.7 billion; a return to full-year revenue growth and, perhaps most welcome, a rise in cloud revenue of 12 percent to $19.2 billion.

IBM results

IBM CFO Jim Kavanaugh

On a conference call IBM’s CFO Jim Kavanaugh pointed to a strong signings quarter, with 16 transactions over $100 million each for the company’s technology services and cloud platforms division.

IBM Results: Two Divestments, Red Hat Shareholders’ Green Light

The company has meanwhile been sloughing off legacy product lines, over the last six weeks divesting its marketing commerce software, and Seterus mortgage business as it bids to narrow focus.

“In 2018 we returned to full-year revenue growth, reflecting growing demand for our services and leadership solutions in hybrid cloud, AI, analytics and security,” said Ginni Rometty, IBM chairman, president and chief executive officer. “Major clients worldwide, such as BNP Paribas, are turning to the IBM Cloud and our unmatched industry expertise to transform their businesses and drive innovation.”

The 108-year-old company has spent the past few weeks trumpeting new cloud client wins. Freshly signed up: France’s largest bank, BNP Paribas, which this week inked one of the largest hybrid cloud agreements in Europe in an eight-year contract extension and network technology giant Juniper Networks in a $325 million deal.

With Red Hat’s shareholders last week voting to approve a $38 billion acquisition by IBM and a more tightly focussed hybrid cloud sales pitch, upside potential looks positive. The company thinks so, despite little obviously dynamic movement across its five sectors. (Global Business Services, including consulting, application management and global process services was a strong performer in Q4, with revenues of $4.3 billion, up 4 percent, with gross profit margin increasing 300 basis points.)

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As Kavanaugh put it: “We’ve got some pluses and minuses at the top line.”

Reitering the benefits of the Red Hat acquisition, he noted: “[Customers] are concerned about the secure portability of data and workloads across cloud environments, about consistency in management and security protocols across clouds, and in avoiding vendor lock-in.”

“They understand how the combination of IBM and Red Hat will help them address these issues. We see an opportunity to lift all of IBM by selling more of our own IBM Cloud and by selling more of our analytics and AI capabilities on OpenShift across multiple platforms.”

IBM results

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