April 19 (Reuters) – IBM Corp (IBM.N) beat Wall Avenue expectations for first-quarter revenue on Wednesday and signaled demand for IT companies was higher than feared, sending shares up 3.5% after the bell.
The corporate’s software program and consulting companies rose 6% and eight.2%, respectively, at fixed foreign money within the first quarter, in step with IBM’s targets. Massive Blue additionally reiterated its full-year free money move forecast of $10.5 billion.
“Buyers blew a sigh of reduction that IBM’s quarterly replace was higher than feared,” mentioned Jesse Cohen, senior analyst at Investing.com.
The IT trade is going through a slowdown after a post-pandemic surge in demand for companies corresponding to consulting, as excessive inflation and rates of interest have pressured prospects to place the brakes on spending. Progress at IBM’s consulting and software program enterprise has additionally slowed down from the mid-to-high teenagers it noticed final yr.
IBM Chief Govt Officer Arvind Krishna mentioned purchasers had been prioritizing digital transformation initiatives that concentrate on “price takeout, productiveness and fast returns”, mirroring feedback by Accenture executives final month.
In consequence, IBM minimize its full-year consulting income progress forecast to six%-8% from earlier expectations of excessive single-digit share progress.
It forecast annual income progress between 3% and 5% at fixed foreign money, having mentioned in January it anticipated income to rise on the lower-end of its mid-single-digit goal. Analysts on common count on a 3.6% progress, in line with Refinitiv information.
Analysts, nonetheless, consider IBM is healthier outfitted to climate cuts in company IT spending.
IBM additionally has much less publicity to U.S. regional banks and is basically shielded from the banking disaster within the nation, with Chief Monetary Officer James Kavanaugh noting regional banks make up lower than 1% of the corporate’s income in america.
Complete income within the first quarter rose 4.4% at fixed foreign money to $14.25 billion, in contrast with analysts’ estimate of $14.35 billion.
Excluding objects, it reported earnings of $1.36 per share, beating estimates of $1.26.
Reporting by Chavi Mehta in Bengaluru; Enhancing by Krishna Chandra Eluri
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