New technologies like cloud computing and AI have propelled IBM’s profits into unexpected heights.
According to the report, the company’s second quarter had beaten analysts’ expectations, with revenues growing 15 per cent, to $10.1 billion in the second quarter. That’s more than half of the company’s total revenue.
IBM has been focusing on new technologies and trying to offset being dragged down by legacy business of selling hardware and software. It calls these new businesses ‘strategic imperatives’, Reuters says.
The company’s CFO, James Kavanaugh, says changing course ended up being the right move. “We accelerated our growth, really capitalising on these emerging high value areas,” Kavanaugh told Reuters. IBM is seeing revenue for three consecutive quarters, after failing for almost six years.
Overall revenue is up four per cent, to $20 billion, more than what analysts had expected with $19.85 billion. Operating gross profit margin in the quarter slipped to 46.5 per cent from 47.1 percent.
“One of the key components was as-a-service growth ... and as that scales through, you’re starting to see margin expansion shine. Gross margin closed the gap,” CFRA Research analyst David Holt said.
At the same time, IBM has been duking it out with Groupon over patents. It is alleging Groupon has been using some of its patents without paying up.
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