On Monday, IBM reported third-quarter revenue and EPS that were in-line with Wall Street estimates, with $17.6 billion in revenue and $2.58 in EPS. Emily McCormick breaks down the company's results on The Final Round.
SEANA SMITH: IBM is out with its earnings report. Emily has the numbers for us. Emily McCormick.
EMILY MCCORMICK: Hi, Seana, we are taking a look here at IBM results that did come in, in line with estimates. Now remember that IBM had pre-recorded those third quarter results, along with that announcement earlier this month that it would be spinning off part of its business.
Now just taking a look at these results, we have earnings per share of $2.58 on revenue of $17.6 billion. So again, that was in line with what the Street was expecting and what the company had pre-reported in those preliminary results.
Now we got a little bit more granularity here on some of these businesses therein in these third quarter results. We have third quarter cloud and cognitive software revenue at $5.55 billion. That was better than the $5.41 billion for that unit specifically that had been expected.
We also saw that third quarter global technology services revenue was $6.46 billion, better than the $6.33 billion anticipated. And that business unit is the one that houses the area that IBM is planning to spin off. Now, remember that the company is planning to complete that spin-off by fiscal 2021, so something that Wall Street will definitely be looking for here during this earnings call later today.
It's going to be just more detail, more granularity on what these two distinct businesses are going to look like post-spin-off. The company had said that the IBM proper would be focused more on that AI and cloud software revenue itself. And then just taking a look at the spin-off company, that's going to be focused more on that legacy IT infrastructure business.
Now, taking a look here in the after market, we do have shares of IBM trading lower just slightly by about half a percentage point. Again, those third quarter results were in line with estimates and those pre-reported results. Seana.
ANDY SERWER: Yeah, Emily, if I can just jump in, I mean, you know, I had a conversation with Arvind Krishna, the new CEO. And I know that he's been on our shows recently and talked about the company, their real expertise going forward is going to be this public-private cloud and how that works. But he certainly has a tall order, doesn't he, in terms of getting this company back to his glory days. Don't you think?
EMILY MCCORMICK: I would agree. I mean, just taking a look at this stock, I mean, it still is down 6 and 1/2% for the year to date. It is up for October by about 3% for the month to date on the heels of that, the news that the company would be spinning off this company and turning it into essentially two separate entities.
But I mean, when we take a look at these results here that IBM has been delivering, the company had a number of quarters where it was just continuously consecutively posting year over year declines in revenue. And that's actually something that we saw again this quarter. That top line was down about 2% over last year. So really trying to focus here on that hybrid cloud, like you mentioned. That acquisition of Red Hat, of course, a big component of that strategy.
But of course, CEO Arvind Krishna, that's really his area of expertise. He'd been in that cloud and cognitive software unit, and that's really what the growth area has been for IBM and has been for a number of its competitors, like AWS and Microsoft with Azure. So trying to make IBM a more formidable competitor here and is something that this new company will be tasked to.
SEANA SMITH: And it's certainly something that analysts are going to be asking about and hope to get more information on, just in terms of the strategy here going forward, following that spin-off. But IBM shares off just around a half of a percent. Emily, thanks for bringing us that.