IBM posts better-than-expected Q2 earnings, excludes Red Hat impact

Things continue to look on the up and up for IBM after it reported better-than-expected second-quarter results on Wednesday.

Among the key numbers: earnings of $3.17 per share on revenue of $19.16 billion, versus $3.07 per share on revenue of $19.16 billion, as expected by analysts, according to Refinitiv.

But even as earnings grew 3 percent, IBM’s revenue fell 4 percent from a year earlier. Year-over-year revenue has now declined for four straight quarters in a row.

The company’s CEO Ginni Rometty, however, remained bullish, crediting the firm’s strong performance across its cloud and cognitive software segment for its growth.

“With the completion of our acquisition of Red Hat, we will provide the only true open hybrid multicloud platform in the industry, strengthening our leadership position and uniquely helping clients succeed in chapter 2 of their digital reinventions,” she said in a statement.  

In a conference call with analysts on Wednesday afternoon, James Kavanaugh, the company’s senior vice president and chief financial officer, emphasized the results do not include the impact of IBM’s $34 billion purchase of open source company Red Hat, finalized just eight days ago.

“We will update our full-year expectations to include Red Hat during our investor webcast on August 2,” he said.

He remained optimistic about what was to come. “This acquisition is an important milestone for IBM, and one that will significantly impact the cloud landscape,” he said.

“It’s clear that the next chapter of cloud will be about shifting mission-critical work to the cloud and optimizing everything from supply chains to core banking systems. This requires a hybrid, multi-cloud approach.”

It’s been a busy few days for IBM. On the heels of closing the Red Hat deal, it announced that t had a signed a “multi-year strategic alliance” with AT&T that will utilize Red Hat’s open source platform to manage workloads and applications.

The deal is deal reportedly worth “billions of dollars.”