IBM revenue rises 5 percent as software grows and cash-flow outlook improves
IBM reported third-quarter revenue growth of 5 percent to 17.1 billion dollars, with software growing faster than consulting and infrastructure. Net income from continuing operations increased, while reported gross margin declined. The company maintained its annual revenue growth outlook at constant exchange rates and now expects free cash flow to rise by more than one billion dollars over the previous year.
Economics & Markets··Morning
IBM raises revenue and annual cash-flow expectations
IBM reported third-quarter revenue of 17.1 billion dollars and lifted its annual free cash flow growth expectation to more than one billion dollars. The results were released on October 21. Management maintained its full-year forecast for revenue growth at constant exchange rates.[1], [2]
Quarterly revenue increased 5 percent as reported and 6 percent at constant currency. Software revenue rose 8 percent to 7.8 billion dollars. Consulting revenue was unchanged at 5.3 billion dollars, while infrastructure revenue increased 4 percent to 3.7 billion dollars.[1]
Net income rises while reported gross margin narrows
Net income from continuing operations increased 26 percent to about 2.2 billion dollars. Diluted earnings per share reached 2.31 dollars. Reported gross margin declined to 56.8 percent, while adjusted operating gross margin was 58.5 percent. The adjusted pretax margin rose to 19.3 percent, in contrast with a decline in the reported pretax measure.[1]
Cash generation accompanies acquisition spending
IBM generated four billion dollars in quarterly operating cash flow and three billion dollars in free cash flow. It paid 1.6 billion dollars in dividends. Acquisitions absorbed 11.4 billion dollars during the year. Total debt stood at 63.8 billion dollars, including financing debt.[1]
