IBM Corp. (NYSE: IBM) shares jumped over 9 percent on Wednesday after it had reported its third quarter earnings, beating analysts’ estimates and also forecasting strong growth rates for the fourth quarter.
IBM reported better than expected earnings for the quarter. IBM reported an EPS of $3.30 compared to a $3.28 estimate by Thomson Reuter, staying flat year over year. The company reported revenue of $19.2 billion, beating estimates of $18.6 billion by Thomson Reuters, but also fell 1 percent year over year.
Third-quarter cloud revenues increased 20 percent to $4.1 billion. IBM stated that the annual exit run rate as-a-service revenue increased to $9.4 billion from $7.5 billion year over year. Revenue from analytics increased 5 percent. Revenue from mobile increased 7 percent. Revenue for security increased 51 percent.
Cognitive solutions revenue increased by 4 percent up to $4.4 billion. It’s global business services’ revenue fell by 2 percent in the quarter, reporting revenue of $4.1 billion. Systems revenue, including hardware and operating software, rose 10 percent up to $1.7 billion, driven by the growth in z Systems and storage. It’s technology services and cloud platform revenue fell 3 percent down to $8.5 billion.
Revenue across all five of its business divisions beat analysts’ estimates, according to StreetAccount.
IBM was close to finally reporting a revenue growth, but instead the company had reported its 22nd straight quarter of declining revenues.
The company had also returned approximately $8 billion to shareholders through dividends and share repurchases.
For the fourth quarter, IBM is projecting revenue to $22 billion to $22.1 billion, which represents a 1.5 percent increase year over year, and also topping analysts’ estimates of $21.8 billion. A significant amount of the revenue will driven by the sales of its new mainframe server. The company also expects an EPS of $11.95 for the full year.
If IBM does meet its forecast for the fourth quarter, it can end its 22 straight consecutive quarter of declining revenue.
“They definitely have some potential going into 2018 in certain parts of the business, and you couldn’t say that a few years ago,” said Daniel Ives, head of technology research at GBH Insights.