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IBM Chairman and CEO Arvind Krishna appears at a panel discussion at the World Economic Forum in Davos, Switzerland, on January 17, 2023.
Stefan Wermut | bloomberg | Getty Images
ibm I mentioned in the second quarter profits It beat analysts’ estimates on Wednesday as the company expanded its gross margin. Revenue missed consensus estimates.
Shares of IBM were little changed in extended trading after the report.
Here’s how the company did:
- Earnings: $2.18, adjusted, versus the expected $2.01 per share, according to Refinitiv.
- he won: $15.48 billion, versus an expected $15.58 billion, according to Refinitiv.
Third-quarter net income rose 13% to $1.6 billion, from $1.4 billion, or $1.72 per share, a year earlier. IBM’s adjusted gross margin was 55.9%, above the Street Account estimate of 54.7%. Revenue was roughly flat compared to the previous year.
IBM CFO James Cavanaugh, in a statement, attributed the company’s expanding gross margin to a more profitable mix of products — software was the company’s fastest-growing division — as well as “productivity initiatives.” ibm He announced the reduction of 3,900 jobs in January as part of a broader downsizing of the technology sector.
IBM reiterated on Wednesday that it expects revenue growth of 3% to 5% through the end of the year in constant currency. The company expects about $10.5 billion in free cash flow in 2023.
Intel’s largest division, the software business, reported sales of $6.6 billion, up more than 7% from a year ago. Software includes products such as the Red Hat Linux operating system and security software.
The fastest growing segment in this division was data and artificial intelligence products, which were up 10% from the previous year.
In May, IBM billed WatsonX as a corporate development studio to “train, fine-tune, and deploy” machine learning models, 15 months after the company sold its Watson Health unit.
CEO Arvind Krishna mentioned the importance of AI several times in a prepared statement.
“We continue to respond to the needs of our customers seeking reliable AI solutions for enterprises, and we are particularly excited about the response to the recently launched WatsonX AI platform,” said Krishna.
IBM’s consulting segment grew nearly 6% year-over-year to $5 billion in sales.
The company’s infrastructure division, which includes sales of mainframe computers, fell 14.6% to $3.6 billion in revenue. This decline was driven by lower revenue from Z Systems servers, which fell by 30%.
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