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Earnings Results: IBM stock rises following Street beat, optimistic outlook despite lost Russia business

International Business Machines Corp.  shares rose in the extended session Tuesday after Big Blue’s quarterly results came in slightly better than expected and the company forecast revenue at the high end of its estimated range.


shares rose 2% after hours, following a 2.4% rise to close Tuesday’s regular session at $129.15. In contrast, the Dow Jones Industrial Average 
 which counts it as a component, finished up 1.5%. Over the past 12 months, IBM shares have crept 1.6% higher, compared with a 2.5% rise by the Dow.

IBM reported first-quarter net income of $733 million, or 81 cents a share, compared with $955 million, or $1.06 a share, in the year-ago period. Excluding discontinued operations, namely IBM’s spinoff of managed infrastructure-service business Kyndryl Holdings Inc.
net income rose to 73 cents a share from 45 cents a share in the year-ago period.

Adjusted earnings, which excludes stock-based compensation expenses and other items, were $1.40 a share.

Revenue rose to $14.2 billion from $13.19 billion in the year-ago quarter. Analysts surveyed by FactSet expected adjusted earnings of $1.39 a share on revenue of $13.78 billion.

“Demand for hybrid cloud and AI drove growth in both Software and Consulting in the first quarter,” said IBM Chief Executive Arvind Krishna in a statement. “Today we’re a more focused business and our results reflect the execution of our strategy. We are off to a solid start for the year, and we now see revenue growth for 2022 at the high end of our model.”

Following a change announced two quarters ago on how it would report business segments following the spinoff, IBM reported that Software revenue rose 12% to $5.77 billion, Consulting revenue rose 13% to $4.83 billion, while Infrastructure revenue slid 2% to $3.22 billion.

The company said it “expects constant currency revenue growth at the high end of the mid-single digit range,” an added 3.5 point contribution from “incremental sales to Kyndryl,” and a “three to four point headwind” from foreign-currency exchange rates.

In its previous earnings report, IBM shares walked back initial gains after the company declined to provide an earnings forecast with CEO Krishna calling for “mid-single-digit revenue growth before Kyndryl and currency.”

Analysts expect revenue of $60.38 billion for the year, or an increase of 5.3%, according to FactSet data.

Last week, Morgan Stanley upgraded IBM’s stock to a buy-grade rating, calling it a “defensive play” amid growing macro risks. 

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