This afternoon following the close of regular trading, IBM reported its first quarter financial results, including revenue of $22.48 billion, GAAP earnings per share (EPS) of $2.29, and non-GAAP EPS of $2.54. Those figures were down, on a year-over-year basis, 4%, 15% and 15%.
Investors had expected IBM to earn $2.54 per share excluding one-time items, a figure it met, on revenue of $22.91 billion, a figure that it did not. In after-hours trading, IBM is down almost 4%. In regular trading, despite an up market, IBM fell a fraction.
IBM’s non-hardware efforts had a modest quarter, with the company’s software top line inching up 2% year-over-year, and its financing revenue up 3%. IBM’s “Systems and Technology” group’s revenue fell 23% on a currency-adjusted basis.
There was a bright spot for IBM, however, which reported that its “cloud” revenue was up 50%, and the company indicating that on a run-rate basis, cloud-as-a-service is up to $2.3 billion per year, an increase of more than 100%. So there is something bubbling under the surface for the venerable technology giant.
Still, to compete in the cloud game, IBM is taking on Amazon, Microsoft, Google, Dropbox, Box, Egnyte, and others in various capacities, so that niche cannot be viewed as a certain victory — although it certainly has the cash to pursue it. The company ended its quarter with cash and equivalents of more than $9 billion, not including short-term investments.
IBM managed to raise its gross profit margin (GAAP) and its operating margin (non-GAAP) by 90 basis points apiece, which could help it eke out EPS gains in the future.
Finally, IBM spent just over $1.5 billion on research and development in the period, down 8.7% from the year-ago period.