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Cloud Stocks: IBM Expands Cloud Partners

Posted on Wednesday, Jul 22nd 2020

IBM (NYSE: IBM) reported its second quarter results earlier this week that surpassed market expectations inspite of being impacted by the Covid-19 crisis. The company is benefitting from its cloud investments and it continues to tie up with strategic partners to drive this growth.

IBM’s Financials
Revenues for the quarter fell 5.4% $18.1 billion, ahead of the Street’s estimates of $17.72 billion. Adjusted earnings of $2.18 a share was also better than the market’s forecast of $2.07 a share for the quarter.

By segment, revenues from Cloud & Cognitive Software, including revenue from Cloud & Data Platforms such as Red Hat, Cognitive Applications, and Transaction Processing Platforms, grew 3% over the year to $5.7 billion. Within the segment, Cloud & Data Platforms grew 29% driven by Red Hat. Trailing twelve months cloud revenues have grown 20% to $23.5 billion.

Revenue from Global Business Services, including revenue from Consulting, Application Management, and Global Process Services fell 7% to $3.9 billion primarily due to declines in Application Management and Consulting. Global Technology Services that includes Infrastructure & Cloud Services and Technology Support Services fell 8% to $6.3 billion. Revenues from its Systems segment that includes Systems Hardware and Operating Systems Software grew 6% to $1.9 billion and Global Financing revenues fell 25% to $265 million.

IBM is no longer providing an outlook due to the current macroeconomic conditions. The market is forecasting revenues of $17.61 billion for the quarter with an EPS of $2.72 and revenues of $72.93 billion for the year with an EPS of $11.26.

IBM’s Partner Network

IBM continues to push for its hybrid cloud offerings under the guidance of Arvind Krishna. The management reiterated its belief in the hybrid solution by continuing to build on partnerships and offerings. Earlier this month, it announced an expanded agreement with Ernst & Young (EY). The global multi-year alliance is aimed at helping organizations accelerate their digital transformation journeys and improve overall client outcomes by leveraging the hybrid cloud capabilities of Red Hat OpenShift, along with IBM Watson, IBM Blockchain, and IBM’s 5G and edge technologies.

The EY-IBM Alliance will provide differentiating business value for clients by building innovative solutions that leverage the cloud, AI, and analytics. Together, teams from these companies will provide joint consulting and systems integration capabilities to deliver long-term value to clients. IBM believes that the alliance will help strengthen its ability to bring its hybrid cloud and AI capabilities to end clients. By tapping into EY’s industry and regulatory expertise, the two companies will be able to drive large and complex client transformations.

Besides the cloud, IBM is also focusing on driving its mobile capabilities. Recently, it entered into an agreement with Verizon to partner on 5G and AI capabilities. As part of the alliance, the two companies will use Verizon’s high-speed, low-latency wireless 5G network, multi-access edge computing (MEC) capabilities, and Internet of Things (IoT) devices and sensors, and integrate them with IBM’s AI, hybrid multi-cloud, edge computing, asset management, and connected operations capabilities.

Initially, the two will offer mobile asset tracking and management solutions that will help organizations improve operations, optimize production quality, and drive worker safety. They will also work on developing combined solutions for 5G and edge computing such as near-real-time cognitive automation for industrial applications. These capabilities will help their customers detect, diagnose, and fix system anomalies and assets in almost real-time.

The market was pleased with IBM’s performance. In the after-hours session, the stock climbed 5% to $133.20. Its stock is currently trading at $126.06 with a market capitalization of $112 billion. It touched a 52-week high of $158.75 in February this year. The market turbulence in March had sent the stock falling to a 52-week low of $90.56.

This segment is a part in the series : Cloud Stocks


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