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IBM records solid but unspectacular Q3, propped up by cloud offerings

(Image credit: Image Credit: Majestic B / Shutterstock)

IBM has published its quarterly financial report and it’s very much in line with what both analysts and the company itself had predicted (opens in new tab).

As for non-GAAP earnings for Q3, the company reported earnings of $2.58 per share - exactly the figure Wall Street anticipated. IBM reported $17.6 billion in revenue, up slightly on analysts estimates of $17.54 billion.

The company's cloud unit (which includes Red Hat) was the biggest revenue generator, recording earnings of $5.6 billion - up seven percent. Cloud and data platforms revenue was up 20 percent, while cognitive applications rose one percent.

The global business services segments was down five percent, taking in $4 billion, while systems revenue was down 15 percent to $1.3 billion.

Speaking on the earnings call, CFO James Kavanaugh said that clients continue to prioritize operational stability, flexibility and cash preservation in the near-term, which is why OpEx is being favored over CapEx, ZDNet reported (opens in new tab).

“This is resulting in some project delays and purchase deferrals, which we see in perpetual software licenses and project-oriented and volume-based services,” he added.

“The last 7 months have made it very clear that companies need to modernize their businesses to succeed in this new normal. This is leading to an acceleration in digital transformations. Cloud and AI are at the center of these transformations.”

Despite relative success with Red Hat, the company’s shares aren’t expected to outpace the rest of the tech sector, analysts believe. Speaking to CNBC (opens in new tab), Ari Wald, Head of Technical Analysis at Oppenheimer, said he believes IBM’s (opens in new tab)‘underperformance’ will continue.

“This stock has been making lower highs for the last seven years dating back to 2013 amid what’s been one of the best tech rallies since the ’90s. That’s a sign of relative weakness, and why we think this stock continues to underperform the tech sector and rise at a lesser pace.”

Sead Fadilpašić is a freelance tech writer and journalist with more than 17 years experience writing technology-focussed news, blogs, whitepapers, reviews, and ebooks. And his work has featured in online media outlets from all over the world, including Al Jazeera Balkans (where he was a Multimedia Journalist), Crypto News, TechRadar Pro, and IT Pro Portal, where he has written news and features for over five years. Sead's experience also includes writing for inbound marketing, where he creates technology-based content for clients from London to Singapore. Sead is a HubSpot-certified content creator.