IBM beats quarterly profit estimates on cloud power

(Reuters) - International Business Machines Corp beat Wall Street estimates for quarterly profit on Thursday, and said it is confident about returning to sales growth in 2021 on the back of strong demand for its cloud business.

The 109-year old firm is preparing to split itself into two public companies, with the namesake firm enhancing its focus on the so-called hybrid cloud, where it sees a $1 trillion market opportunity.

Quarterly sales in IBM's cloud-computing business rose 10% to a record $7.5 billion.

Total revenue fell 6.5% to $20.37 billion in the fourth quarter, missing analysts' average estimate of $20.67 billion, according to IBES data from Refinitiv. Excluding the impact from currency and business divestitures, revenue declined 8%.

The revenue miss was mostly caused by a rare sales decline in its cloud and cognitive software unit, where revenue fell 4.5% to $6.8 billion after weak sales in its transaction processing platforms (TPP) business.

Chief Financial Officer James Kavanaugh told Reuters that the TPP division was hurt by seasonal weakness in IBM's mainframe computers business.

Excluding items, the company earned $2.07 per share, above estimates of $1.79.

(Reporting by Munsif Vengattil in Bengaluru; Editing by Devika Syamnath)

01/21/2021 21:18

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