IBM has withdrawn its 2020 annual forecast as the coronavirus pandemic makes seismic changes to the way businesses operate and what they spend their budgets on.
Announcing its quarterly earnings, IBM said software sales have been hit particularly hard. However, as the shift to remote work accelerates, the firm believes its hybrid cloud business could make up some of the shortfall.
As IBM’s biggest clients come from industries only moderately or minimally impacted by the virus outbreak, the company expects to operate as usual. It also expects - perhaps most importantly - to continue paying out dividends.
CFO James Kavanaugh told Reuters the company has “ample free cash flow and liquidity”, which means it will continue to invest in businesses and reward its shareholders.
“We’ve done many different stress tests of our business model, running multiple scenarios around the uncertainties of the duration of the health crisis, but also the rate and pace of recovery around the world," he explained.
IBM’s quarterly revenue was just shy of Wall Street’s predictions, but sales in cloud computing rose by almost a quarter (19 percent), beating profit targets with a total of $5.4 billion.
IBM’s total revenue fell 3.4 per cent to $17.57 billion in the quarter, just below analyst predictions of $17.62 billion.
Net income fell to $1.18 billion (or $1.31 per share) in Q1, from $1.59 billion the previous year. On an adjusted basis, the company earned $1.84 per share, above estimates of $1.80 per share.