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How IBM’s Revenue Finally Rose after 22 Quarters

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IBM marginally beat earnings and revenue estimates

International Business Machines (IBM) reported its 4Q17 earnings on January 18, 2018. The company beat both earnings and revenue estimates. It finally saw revenue growth on a YoY (year-over-year) basis in 4Q17 after 22 consecutive quarters of negative growth.

IBM generated revenue of $22.5 billion in the quarter, compared to $21.8 billion in the same quarter last year. The company reported adjusted EPS (earnings per share) of $5.18 per share. Wall Street had expected revenue of $22.1 billion and EPS of $5.17. However, IBM said that it had to make a one-time tax payment of $5.5 billion on account of the new tax law.

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IBM’s cloud revenue saw robust growth

IBM saw robust growth in its industrial grade computer shipments, which rose 32% YoY to $3.3 billion. It generated $5.5 billion in cloud computing revenue, a rise of 30% compared to the same quarter in 2016. IBM needs to hang on to its cloud customers, as competition in the cloud segment is stiff.

The 106-year-old company aims to generate more than 50% of its revenue from strategic imperatives in order to grow faster. These strategic imperatives include upcoming technologies such as AI (artificial intelligence). In 4Q17, IBM generated 49% of its revenue from strategic imperatives.

The company’s shares fell 3.1% in after-hours trading on January 18.

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