IBM Banks On AI

Earlier this week, IBM (Nasdaq: IBM) declared its third quarter results that exceeded earnings expectations despite missing revenue estimates. The stock fell nearly 5% post the result announcement in the after-hours session.

IBM’s Financials
Revenues for the third quarter fell 3.9% over the year to $18.03 billion, missing the Street’s forecast of $18.23 billion for the quarter. This was the fifth straight quarter when revenue for the company declined. Net income for the year came in at $1.7 billion, or $1.87 per share compared with previous year’s net income of $2.69 billion, or $2.94 a share. Adjusted net income for the quarter was $2.68 per share compared with the market’s expectations of $2.66 per share.

By segment, Cloud & Cognitive Software revenue that includes Red Hat grew 6% over the year to $5.3 billion, driven by growth in security, IoT, data and AI platforms, and hybrid cloud revenues. Revenues from Red Hat grew 19% to $371 million. On a trailing 12-month basis, cloud revenues came in at $20 billion with the third quarter accounting for $5 billion.

Revenue from the Global Business Services segment grew 1% to $4.1 billion. Global Technology Services revenues fell 6% to $6.7 billion. Revenues from Systems segment fell 15% to $1.5 billion, Global Financing fell 12% to $343 million, and Other segment was down 78% to $107 million.

IBM expects to end the year with GAAP diluted earnings per share of at least $12.80, in line with the market’s estimates for the year.

IBM’s AI Focus

IBM continues to drive growth by leveraging its AI platform Watson. Recently, it announced that it had joined a global consortium of partners, led by marine research organization ProMare, to build a fully-autonomous ship that will cross the Atlantic in September 2020. Being called the Mayflower Autonomous Ship (MAS), the vehicle will use IBM’s AI, cloud, and edge computing technologies to navigate across the ocean from Plymouth, England to Plymouth, Massachusetts.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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Stock Fan 4 weeks ago Member's comment

Gonna be spending some coin on those autonomous ships but it's a worthwhile venture. The ROI could take a couple of years.