Ahead Of IBM's Q1 Earnings: Hybrid Cloud & GBS In Focus

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International Business Machines Corporation (IBM - Free Report) is slated to release first-quarter 2021 results on Apr 19, 2021.

The company’s first-quarter results are likely to reflect healthy uptick in the company’s hybrid cloud services, mobile, analytics, cognitive technologies, and AI-related solutions.

Moreover, IBM, which carries a Zacks Rank#3 (Hold), has been striving to improve efficacy of its quantum computing systems and blockchain offerings. In this respect, increasing IBM Q Network customer base is a positive.  

International Business Machines Corporation Price and EPS Surprise

International Business Machines Corporation Price and EPS Surprise

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However, pandemic-induced restricted economic activity and decline in global IT spending may have impeded business prospects in the first quarter for IBM. Click here to know how the company’s overall first-quarter performance is expected to be.

Strength in Red Hat to Favor Cloud Business

Pandemic-triggered digital transformation by enterprises across the globe is expected to have resulted in healthy uptake of IBM’s hybrid cloud offerings. This is likely to have aided top-line growth in the about-to-be-reported quarter.

For the first quarter, the Zacks Consensus Estimate for Cloud & Cognitive Software segment’s revenues-external is pegged at $5.342 billion.

In the first quarter of 2020, IBM’s Cloud & Cognitive Software segment reported revenues of $5.238 billion.

Synergies from Red Hat acquisition are likely to have contributed to Cloud & Cognitive Software segment’s revenues. Revenues from Red Hat in fourth-quarter 2020 increased 19% (at 17% on constant currency) on a normalized basis. Presently, more than 2,800 clients are utilizing Red Hat and IBM’s hybrid cloud platform.

Management is optimistic about enhancing utility of hybrid cloud services based on architecture built by IBM and Red Hat. The company has been leveraging OpenShift container platform to facilitate clients to upscale business operations in a secure manner via AI-powered Cloud Paks.

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