International Business Machines (IBM) reported solid 34% growth in its earnings for the second quarter. IBM displayed comprehensive progress in cloud computing, Big Data, Analytics, security and technology fields that are part of its transformation model. However, its core business such as hardware, computer service and weak software revenue remains at risk, and pressurized its revenue in total.
A closer look at the results
Nevertheless, IBM topped the analysts' estimates on both the top and bottom lines. Its net income rose 28% in the quarter to $4.1 billion, or diluted earnings of $4.32 per share, compared to $3.2 billion, or diluted earnings of $3.22 per share in the same quarter last year. However, its revenue dipped nearly -2.25% to $24.36 billion year over year. Analysts had been modeling diluted earnings of $4.30 per share on revenue of $24.13 billion.
Looking forward, the company is investing heavily in various potential markets it has under its belt such as cloud and security, software solutions, application outsourcing, and mobile business that should drive its growth. Moreover, it's strategic move such as broadening its SoftLayer cloud hubs business, its new platform-as-a-service to gear up deployment of hybrid clouds, expanding ecosystem, and enlarging its mobile business, highlight sound prospects for the company that should help the IBM to deliver good margins in the future.
Investments
In addition, IBM has invested $1.2 billion in its SoftLayer cloud hubs business, and launched BlueMix as its new platform-as-a-service that will enhance its capabilities in the deployment of hybrid clouds. IBM has also opened a number of new SoftLayer data centers across the world. IBM has key cloud centers in almost all regions and the company is determined to double its SoftLayer centers with 40 cloud datacenters in more than 15 countries.
Its front office transformation has been very impressive as IDC has ranked IBM number one in both Overall Business Consulting and Cloud Professional Services. Its mobile consulting services has been ranked number one by Forrester, which will help company to gain further market share in the segment.
IBM also announced divestment of its customer care or BPO, and the company is all set to sell its industry standard low-end server business to its partner Lenovo, which will allow IBM to right-size the business to the market dynamics and further enhance its growth.
Moreover, IBM has just announced an investment of $3 billion in research and early-stage development over the next five years to develop next-generation chip technologies that will add value to its emerging cloud, big data, mobile computing, security and cognitive systems. The company has just announced New Big Data capabilities on its IBM cloud marketplace. These new cloud services should help the enterprises with added interactive content which are usable and secure, and can deliver better results and improve the decision-making process. The enterprises now will be able to easily access this new Big Data services as it is available on any device.
Additionally, IBM has formed a strategic partnership with Apple to provide a new level of business value from mobility for enterprise clients that should fuel up its sales for the enterprise business in the upcoming quarters. IBM now looks strong with this partnership to deliver a new class of enterprise ready, MobileFirst business applications for iOS.
These strategic initiatives will also allow IBM to expand its mobile device productivity, enabling big data and analytics at the point of contact with its consultants and other client-facing specialist. These moves will certainly enhance its enterprise capabilities with its unique strength and innovations that will create a competitive edge over its peers in the emerging markets of enterprise IT.
IBM has also ramped up the shipment for its POWER8, and expanded its OpenPOWER consortium during the quarter. The company now has more than 36 members across 10 countries, including nine in China. This membership is more diverse and includes chip designers, hardware component OEMs, system vendors, middleware and software providers, opening great opportunity for the company to tap the underlying growth in emerging markets such as cloud computing, Big Data, Analytics, security and technology. These alliance members can now design and control their own encryption, accessing high end technology though Power architecture, which is now available for open development and to integrate new designs into their hardware platforms.
More catalysts
IBM also looks good in its Flash System with a few new launches such as V7000 update to its Storwize portfolio and Flash-enabled DS8K. Flash system had achieved a double digit growth in the quarter and revenue from its Storwize portfolio now has doubled. IBM also sees a continuous demand for its Flash System across the world that should help the company to offset its underperforming segments such as hardware and computer service.
IBM also witnessed strong momentum for its security software middleware that is driving its software performance. It continues to see strong client demand and stunning r
No comments:
Post a Comment