IBM reported a 5.4% decline in quarterly revenue but its stock jumped in after-hours trading Monday amid optimism that its push into cloud computing may finally be paying off.
According to Reuters, IBM’s cloud strategy may be getting a boost as “large corporations accelerate their digital shift due to the coronavirus crisis.”
In the second quarter, total revenue declined to $18.12 billion from $19.16 billion a year earlier but revenue from the cloud business rose 30% to $6.3 billion. Excluding items, IBM earned $2.18 per share.
Analysts had expected IBM to earn $2.07 per share on revenue of $17.72 billion. On news of the earnings, the company’s shares rose 4.6% to $132.25.
“Our clients see the value of IBM’s hybrid cloud platform, based on open technologies, at a time of unprecedented business disruption,” CEO Arvind Krishna said in a news release. “We are committed to building, with a growing ecosystem of partners, an enduring hybrid cloud platform that will serve as a powerful catalyst for innovation for our clients and the world.”
Krishna replaced Ginni Rometty, the architect of IBM’s cloud push, as CEO in April. According to Investor’s Business Daily, he has focused on “what the company calls a hybrid cloud architecture, which provides both an internal and external cloud-based operation for its customers.”
As senior vice president for IBM’s Cloud and Cognitive Software business, Krishna was an advocate of its landmark $34 billion acquisition of software maker Red Hat. IBM said Red Hat led the growth of its cloud business in the second quarter.
“The trend we see in the market is clear. Clients want to modernize apps, move more workloads to the cloud and automate IT tasks,” Krishna told analysts in an earnings call.
Among IBM’s other segments, revenue from global business services unit fell 7% to $3.9 billion as customers cut or delayed spending on discretionary projects due to COVID-19.
“While we have adapted quickly to conduct business virtually around the world, as expected, we did have disruptions in transactional performance and volume reductions,” CFO Jim Kavanaugh said.