IBM today reported second quarter 2019 net income of $2.5 billion, or $2.81 per share, up 4% from the same quarter a year ago. Adjusted earnings were $3.17 a share.
The company reported mixed results with its biggest business segment, global technology services, seeing a revenue drop of 6.5% year-over year. But IBM saw revenue growth in its cloud and cognitive software business up 3.2% year-over-year, and its global business services revenue was up 0.5% compared to the same quarter a year ago.
IBM stock was trading essentially flat after hours on Wednesday.
Of the cloud and cognitive software business, IBM’s Chief Financial Officer Jim Kavanaugh said, “We had growth across all three areas with cloud and data platforms up 7%; cognitive applications up 5%; and transaction processing platforms up 4%.” The company’s software offerings help clients run data and applications on-premises and on private and public clouds.
An example of a client using IBM’s cloud and data platforms is SK Group in South Korea, which uses the IBM Cloud Private to package applications as containers and re-factor them with IBM micro services across their businesses.
Red Hat Acquisition
IBM completed its $34 billion acquisition of Red Hat just eight days ago, and Kavanaugh made clear that Red Hat was not a factor in IBM’s second quarter earnings. He said the acquisition is an important milestone for IBM and one that will significantly impact the cloud landscape. “It is clear that the next chapter of cloud will be about shifting mission-critical work to the cloud,” said Kavanaugh. “This requires a hybrid, multi-cloud, open approach to provide portability, management consistency, and security for these enterprise workloads.”
Just yesterday, IBM announced an expanded two-way relationship with AT&T where IBM will continue to provide AT&T Business with open source systems, which IBM mostly inherited from its acquisition of Red Hat. And AT&T will provide IBM with software-defined networking (SDN) expertise, and AT&T Business will also move more of its applications to the IBM Cloud.
On today’s call with investors Kavanaugh said, “IBM will modernize and move AT&T Business solutions applications to the IBM Cloud, while collaborating on an edge computing platform for their enterprise clients.”