- IBM shares rallied late Monday after the tech giant posted second-quarter results that beat Wall Street's expectations.
- But CEO Arvind Krishna said the company has decided not to offer a new financial guidance for 2020 due to the economic uncertainty caused by the pandemic.
- "It's tough to give guidance, but it's likely that we see that the economic recovery is looking to be longer and more protracted then we might have hoped for back in March," Krishna said on the earnings call with Wall Street analysts.
- IBM reported a second-quarter profit of $1.36 billion, or $1.52 a share, compared with $2.5 billion, or $2.81 a share for the year-ago period. Revenue slipped 5.4% to $18.1 billion from the year-ago quarter. Adjusted profit was $2.18 a share. Analysts were expecting a profit of $2.07 a share, on revenue of $17.72 billion.
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IBM shares rallied Monday after the company posted second quarter financial results that beat Wall Street expectations, despite the challenges posed by the coronavirus crisis. But new CEO Arvind Krishna warned that it will take longer for the economy to recover as the tech giant announced that it will not issue a guidance for 2020.
"It's tough to give guidance, but it's likely that we see that the economic recovery is looking to be longer and more protracted then we might have hoped for back in March," Krishna said on the earnings call with Wall Street analysts.
IBM reported a second-quarter profit of $1.36 billion, or $1.52 a share, compared with $2.5 billion, or $2.81 a share for the year-ago period. Revenue slipped 5.4% to $18.1 billion from the year-ago quarter. Adjusted profit was $2.18 a share.
Analysts were expecting a profit of $2.07 a share, on revenue of $17.72 billion.
IBM's cloud software division, which includes Red Hat, posted a modest revenue gain, but its two major services business units, which make up more than half of the company's total revenue, each saw revenue declines. Red Hat alone — which IBM acquired last year for $34 billion and which is a critical part of its push for a bigger piece of the cloud market — posted a solid 17% gain in revenue.
Noting that two of IBM's peers, Oracle and Accenture, recently provided financial guidance, a Morgan Stanley analyst asked Krishna whether there is "something different about your business, exposure, or what you see in the market that is holding you back from providing guidance?"
Krishna pointed to the "uncertainty in the economic environment around the globe." IBM had withdrawn its full-year guidance last quarter, saying it would reevaluate that decision depending on the impact of the pandemic.
"Maybe we were a little bit optimistic that we will get more stability of the health [situation] and that the curve will begin to flatten in three to four months," Krishna said. That view "turned out to be a misplaced expectation," he said.
Still, Krishna reaffirmed his strategy for IBM. When he took over in May, he stressed the tech giant's plan to dominate the hybrid cloud market which he has projected will eventually grow into a $1.2 trillion market. Krishna also said IBM will also focus on the growing AI market. IBM earlier this year said it would stop selling general purpose facial recognition or analysis software, but has continued to work on other uses for the technology.
"While these are challenging times, we are excited about the opportunity that we have moving forward," he said.
IBM shares were up nearly 5% in late trades on Monday.
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