Cloud Continues to be IBM’s Strong Spot

IBM announced its second-quarter 2016 earnings results, and its cloud business continues to accelerate. Overall, revenue was $20.2 billion for the quarter, and “strategic imperatives”—which include cloud and data analytics—were $8.3 billion in the quarter, up 12% year to year. Cloud revenues (public, private and hybrid) for the quarter increased 30%. Cloud as-a-service revenues saw an annual run rate of $6.7 billion in the quarter, up 50% year to year.

Systems (includes systems hardware and operating systems software)—revenues of $2.0 billion, down 23.2%. Revenue reflects z Systems product cycle dynamics; gross profit margin improved in both z Systems and Power. IBM did not provide a breakdown of z Systems revenues. Global Financing (includes financing and used equipment sales)—saw revenues of $424 million, down 11.3%.

"IBM continues to establish itself as the leading cognitive solutions and cloud platform company,” said Ginni Rometty, IBM chairman, president and chief executive officer. “In the second quarter we delivered double-digit revenue growth in our strategic imperatives, driven by innovations in areas such as analytics, security, cloud video services and Watson Health, all powered by the IBM Cloud and differentiated by industry.”

IBM’s “Cognitive Solutions” (includes solutions software and transaction processing software) saw revenues of $4.7 billion, up 3.5%. Cloud revenue within the segment grew 54%.  Solutions software revenue grew, led by Analytics (including Watson) and Security. Global Business Services (includes consulting, global process services, application management)—revenues of $4.3 billion, down 2%. Strategic imperatives revenue within the segment was up 14%.

IBM’s Technology Services & Cloud Platforms (includes infrastructure services, technical support services, integration software) saw revenues of $8.9 billion, down 0.5% (flat adjusting for currency). Growth of 35% in strategic imperatives revenue within the segment was driven by strong hybrid cloud infrastructure services performance, the company reported.

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