- Revenue Performance: IBM’s total revenue for the third quarter was $14.97 billion, marking a 1.5% increase from the previous year, though slightly below the estimate of $15.05 billion.
- Software Segment: Software revenue grew by 9.7% to $6.52 billion, surpassing the expected $6.37 billion.
- Consulting Segment: Consulting revenue fell by 0.5% to $5.15 billion, below the estimated $5.22 billion.
- Infrastructure Segment: Revenue from infrastructure decreased by 7% to $3.04 billion, not meeting the $3.24 billion estimate.
- Financing Segment: Financing revenue was down by 2.7% at $181 million but exceeded the forecast of $175.6 million.
- Other Revenue: Revenue in this category fell significantly by 60% to $68 million.
- Margin and Earnings: Adjusted gross margin improved to 57.5%, beating the estimate of 56.6%. Operating EPS rose to $2.30 from $2.20 last year, surpassing the estimated $2.22.
- Free Cash Flow: Free cash flow increased by 23% to $2.06 billion, slightly below the estimate of $2.08 billion.
- Future Outlook: IBM maintains its forecast for free cash flow to exceed $12 billion for the year, close to the projected $12.25 billion.
- Currency Impact: The company anticipates a half-point currency headwind to revenue growth in the fourth quarter, with revenue growth expected to remain consistent with the third quarter.
- AI Growth: IBM’s generative AI business has expanded to over $3 billion, a growth of more than $1 billion compared to the previous quarter, showcasing increased momentum in AI under CEO Arvind Krishna’s leadership.
International Business Machines on Smartkarma
Analysts on Smartkarma have been closely covering International Business Machines (IBM) from different perspectives. Tech Supply Chain Tracker reported on the rapid evolution of liquid cooling solutions for AI servers, highlighting advancements by companies like L&T Semicon and TSMC in semiconductor technologies. On a positive note, this suggests growth and innovation in the industry for high-performance computing needs.
However, Caixin Global provided a bearish view as IBM announced the closure of two major research and development units in China due to declining business in the country. This move reflects a broader trend of U.S. tech firms scaling back their presence in China, impacting employees and strategic focus areas for IBM in the region.
A look at International Business Machines Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 2 | |
| Dividend | 4 | |
| Growth | 4 | |
| Resilience | 2 | |
| Momentum | 5 | |
| OVERALL SMART SCORE | 3.4 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
International Business Machines Corporation (IBM) has received promising scores across various key factors according to Smartkarma Smart Scores. With a solid performance in Dividend and Growth scoring a 4 out of 5 for each, investors can find comfort in IBM’s ability to provide consistent returns and potential for future expansion.
Additionally, the company has demonstrated high Momentum with a score of 5, indicating strong market performance and investor interest. However, IBM’s Value and Resilience scores at 2 each suggest room for improvement in terms of the company’s current valuation and ability to withstand market fluctuations. Overall, IBM presents a mixed outlook with strong growth potential but considerations for value and resilience.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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