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IBM beats expectations in second-quarter earnings

Yahoo Finance's Jared Blikre breaks down IBM's second-quarter earnings results, which was a beat on both the top and bottom line.

Video Transcript

SEANA SMITH: Well, sticking with tech, IBM out with its earnings report. We can see shares moving lower here after hours. Jared Blikre has that for us. Jared.

JARED BLIKRE: That's right. The stock has been both positive and negative here. We're talking about IBM second quarter results. Operating EPS coming in at $2.31. That is $0.02 higher than TheStreet estimate, as you can see on your screen. Revenue clocking in at $15.5 billion. Estimate was for $15.2. And when you break it down by segments here-- and this is going to really illustrate the currency headwinds.

Now, we know the dollar has been very strong this year, and it is weighing on company results. So consulting segment revenue, that came in at $4.81 billion, beating TheStreet estimate. And also, software revenue, that's $6.17 billion. But that came in light of the estimate of $6.3 billion. Infrastructure revenue, $4.24 billion. Estimate was for quite a bit lower, so a nice beat there, $3.76 billion. And then adjusted gross margin, that came in a little bit light, 54.5% versus the estimate of 56.4%.

Now, free cash flow ended the quarter at $2.09 billion. And just getting back to that dollar issue that I think a lot of companies are dealing with, now, that revenue, excuse me, figure of 15 and a half billion, that's up 9%. But if you take out the currency headwinds, that's up 16%. And it gets even bigger when you talk about the hybrid cloud revenue. That was $21.7 billion, up 16% over the last 12 months. But up 19% at a constant currency basis.

Also taking a look at some of the other stats here, we do have cash flow on a consolidated basis. Year-to-date, net cash from operating activities, $4.6 billion free cash flow, up $3.3 billion. Want to go to the YFi Interactive because we got a minute here. This is a 10-year chart of Big Blue here, IBM. Just want to show you a huge, huge downtrend. This is over many, many years. We have just been consolidating. Looks poised for a breakout, but we'll have to see what happens on the call. Maybe not-- maybe not this quarter, guys.

- OK, Jared Blikre, thanks so much with those IBM earnings just coming in, the breaking news there. Thank you, Jared.