Dive Brief:
- IBM’s second-quarter revenue report released Monday beat analysts' expectations, suggesting the company's shift toward cloud-based services and cognitive solutions may be beginning to pay off.
- Revenue in IBM’s strategic imperatives group—which includes cloud, analytics, social, security and mobile products—grew 12% year over year to $8.3 billion.
- Big Blue's cognitive solutions division, which includes Watson, had revenue growth of 3.5% to $4.7 billion, showing growth for the first time after falling five consecutive quarters in a row.
Dive Insight:
Even though a number of the company's segments showed strong revenue growth, IBM saw its 17th straight quarter of revenue decline, though it was not as steep as analysts expected. Its total revenue dropped 2.8% from a year earlier as the company’s traditional hardware businesses continued to struggle.
But the company is looking toward technologies in its strategic imperatives segment as an area for continued growth. In the last 12 months, the segment had revenue of $30.7 billion, representing 38% of Big Blue's revenue.
IBM has worked to build its cognitive computing, cloud and IoT businesses and shift away from its older business platforms. This quarter is the first solid evidence that the strategy may be beginning to work.
Earlier this year, IBM began laying off employees as part of the company’s plan to "rebalance" its workforce and cut nearly one-third of the U.S. staff. The company also announced it plans to close its campus in Somers, New York and move workers to an office in North Castle, New York. As Big Blue shifts its core focus, more change is likely.
