Is This Finally the Turn Around IBM Has Been Waiting For?

By Chris Lange Updated Jan 12, 7:04AM EST · Published Oct 18, 10:45AM EDT

Is This Finally the Turn Around IBM Has Been Waiting For? — © Thinkstock

International Business Machines Corp. (NYSE: IBM) reported its third-quarter financial results after the markets closed on Tuesday. This tech giant has been known for its declining revenues over the years, and many have even considered it a value trap, but that might be changing. Even though revenues continued to decline for this quarter, a positive outlook for the fourth quarter could signal a huge change within the company.

Big Blue posted $3.30 in earnings per share (EPS) and $19.15 billion in revenue. That compares with consensus estimates of $3.28 in EPS and revenue of $18.67 billion. The same period of last year reportedly had EPS of $3.29 and $19.23 billion in revenue.

In terms of its segments for the quarter, IBM reported as follows:

Cognitive Solutions revenues totaled $4.4 billion, up 4% (up 3% adjusting for currency), driven by solutions software, including security and analytics, and transaction processing software.
Global Business Services revenues were $4.1 billion, down 2%. Strategic imperatives revenue grew 10%, led by the cloud practice.
Technology Services & Cloud Platforms revenues were $8.5 billion, down 3% (down 4% adjusting for currency). Strategic imperatives revenue grew 12%, driven by hybrid cloud services, security and mobile.
Systems revenues were $1.7 billion, up 10%, driven by growth in z Systems and storage.
Global Financing revenues totaled $427 million, up 4% (up 3% adjusting for currency).

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Big Blue did not formally issue guidance for the fourth quarter, but management did mention that this coming quarter revenues should rise by about $2.8 billion, sequentially. Ultimately this implies that IBM would have revenues over $22 billion, compared with $21.77 billion in the fourth quarter from last year. Consensus estimates are calling for $5.15 in EPS and $21.8 billion in revenue for the current quarter.

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Ginni Rometty, IBM’s board chair, president and CEO, commented:

In the third quarter we achieved double-digit growth in our strategic imperatives, extended our enterprise cloud leadership, and expanded our cognitive solutions business. There was enthusiastic adoption of IBM’s new z Systems mainframe, which delivers breakthrough security capabilities to our clients.

Shares of IBM were last seen up about 9% at $159.50, with a consensus analyst price target of $159.82 and a 52-week range of $139.13 to $182.79.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.