IBM stock is surging following an earnings report this week that beat Wall Street estimates largely on the strength of growth in its cloud and security segments.
During a call with analysts, IBM Chief Financial Officer Martin Schroeter said the company is staying laser focused on cloud, cybersecurity and data analytics to counter a slowdown in its legacy hardware and software divisions. Cloud in particular, he said, is seeing a lot of momentum and has accounted for 20 percent of the company’s total revenue over the last 12 months.
“We’re investing to shift our practices to where we see the opportunity, which is around digital, cognitive, cloud, and automation,” Schroeter said
The third-quarter financial results were not all good news, however. IBM reported its 22nd consecutive quarter of year-over-year sales declines with $19.2 billion in total revenue. But that was still good enough to handily beat analysts’ estimates of $18.6 billion (IBM was also assisted by a super low tax rate of 11 percent).
And it was enough to propel Big Blue’s stock to jump by 9 percent on Wednesday morning to around $160, which added more than $12 billion to the company’s market value. The stock continued to hover at that range through Thursday. That, however, is still far from the $200 price the stock once enjoyed.
Some cloud highlights from IBM’s Q3 earnings:
- Total cloud revenue, including cloud delivered as a service, for the quarter was $4.1 billion, up 20 percent from last year.
- Total Cloud revenue for the last 12 months is $15.8 billion, which accounts for 20 percent of IBM’s revenue during that period
- The strategic imperatives segment — analytics, cloud, mobile and security — grew to $8.8 billion in revenue, up 11 percent year over year
- Revenue for IBM’s Software-as-a-Service cloud service was up 24 percent; IBM, however, remains a small player in the overall SaaS market with just 1.5 percent market share, according to Gartner
- During the third quarter, IBM signed new cloud and digital services deals with major enterprise customers such as Volkswagen, BBVA and HSBC
