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IBM may have won back some investors\u2019 trust after posting renewed sales growth and saying its cloud business is performing well.<\/p>\n
Revenue gained 2 percent, adjusted for currency fluctuations, to $20 billion in the second quarter, International Business Machines Corp said Wednesday in a statement. Analysts estimated $19.9 billion.<\/p>\n
Profit, excluding some items, was $3.08 a share, compared with analysts\u2019 projections of $3.04 a share.<\/p>\n
Still, profit margins are stagnating and the Armonk, New York-based company saw a slight sales decline in the unit that includes its Watson artificial intelligence business. Shares gained about 1 percent in extended trading after closing at $144.52 in New York.<\/p>\n
While revenue has declined for most of the past five years, IBM has been asking investors to focus on what it calls strategic imperatives – a collection of newer businesses like cloud computing, AI and security software. The cloud business grew 18 percent, adjusting for currency changes, to $4.7 billion in the quarter.<\/p>\n
That\u2019s an improvement from the disappointing 14 percent IBM posted earlier this year.<\/p>\n
Strategic imperatives, as a whole, generated $10.1 billion in the period, bringing the company closer to its goal of $40 billion in revenue from the category by year-end.<\/p>\n
\u201cIt\u2019s probably the best quarter that we\u2019ve delivered in quite some time,\u201d chief financial officer Jim Kavanaugh said in a phone interview.<\/p>\n
In April, investors sent the stock tumbling the most in two years after first-quarter growth in the cloud business slowed and margins across the company narrowed.<\/p>\n
Cognitive solutions, which includes the much-advertised Watson AI line of businesses, generated revenue of $4.6 billion in the period. Adjusting for currency changes, that means it declined 1 percent year over year. Adjusted profit margins, another key measure for investors, narrowed to 46.5%.<\/p>\n
Revenue from cognitive solutions fell because much of the unit is related to transaction software, which is a declining business, Kavanaugh said. Watson is actually growing, he said, though the company doesn\u2019t break out its revenue.<\/p>\n
Net income in the recent period was $2.4 billion, or $2.61 a share, from $2.33 billion, or $2.48 a share, a year earlier, the company said.<\/p>\n