IBM has broken the streak: After 22 consecutive quarters of falling annual sales growth, IBM is finally showing some signs of bouncing back.
All in, IBM came up with $13.80 in earnings per share, excluding certain items, just a penny short of analyst estimates. The firm was hit with a one-time charge of $5.5 billion as a result of the recent passage of U.S. tax reform.
The big news out of the report came care of IBM’s emerging suite of offers around analytics, cloud, mobile and security. In the fourth quarter, strategic initiatives delivered $11.1 billion in revenue, which is 49 percent of IBM’s revenue — a big uptick from the 35 percent it represented two years ago.
“Revenue in our Digital Strategy and iX business grew about 40 percent,” former CFO (and current head of global markets) Martin Schroeter said in a call with investors after IBM’s earnings were announced. “And we’re also seeing good growth in the new practices we’ve built around our innovative technologies like AI and blockchain. The reason we’re able to lead in these emerging areas is because of the technology, as well as our ability to implement these platforms into our clients’ workflows.”
IBM had $17 billion in cloud revenue in 2017, up 24 percent year over year, with $9.3 billion of that amount delivered as a service. IBM’s Technology Services and Cloud Platforms revenue fell 1 percent to $9.2 billion in the quarter. Its Cognitive Solutions business grew by 3 percent at $5.4 billion in revenue. The Global Business Services unit hit $4.2 billion in revenue, giving it a 1 percent gain.
IBM also keenly talked up blockchain and its efforts around the emerging technology in the earnings after-wrap.
“Remember that for us, blockchain is a set of technologies that allow our clients to simplify complex, end-to-end processes in a way that couldn’t have been done before. It requires the attributes of immutability, permissioning and scalability, and we’re already performing thousands of transactions per second. And we offer some of the most advanced cryptography available to verify transactions,” Schroeter said.
The executive went on to note that IBM built partnerships with “hundreds of clients” with their IBM blockchain platform in the third quarter.
“We’ve collaborated on 35 active networks with clients such as CLS, Everledger, KBank, London Stock Exchange and Mizuho. These reflect a wide variety of use cases, like cross-border payments and financial services, supply chains in retail, valuable goods authentication in industrials and digital identification for governments. This quarter, we extended our food safety initiative with Walmart into China. And just this week, we announced the creation of a joint venture with Maersk to provide more efficient, secure global trade using blockchain technology.”
Schroeter, in a follow-up appearance on CNBC with Jim Cramer continued boosting IBM’s future in blockchain transactions.
“There’s no more paperwork, and you know that it’s going to be cleared at a specific time,” Schroeter said, using shipments as an example. “Everyone has perfect visibility to where everything is. You’ve just shortened that cycle dramatically. That creates a lot of value — a lot of value for manufacturers and retailers.”