IBM reported a mixed first quarter where earnings were better-than-expected, revenue was light and cloud-as-a-service sales hit a annual run rate of $8.6 billion.
The company reported first quarter net income of $1.8 billion, or $1.85 a share, on revenue of $18.2 billion, down 3 percent from a year ago. Non-GAAP earnings were $2.38 a share.
Wall Street was looking for IBM to report non-GAAP earnings of $2.35 a share on revenue of $18.4 billion.
Analysts have been giving IBM more credit for its "strategic imperatives" revenue, which consists units like analytics, cognitive technology and cloud. On that score, IBM said strategic imperatives account for 42 percent of the company's revenue as of the first quarter.
CEO Ginny Rometty said IBM is developing more emerging technologies such as blockchain and quantum computing for the product pipeline.
As for the outlook, IBM maintained its outlook of non-GAAP earnings of at least $13.80 a share with flat free cash flow for 2017.
By the numbers:
- Cloud revenue in the first quarter was $3.5 billion, up 33 percent from a year ago.
- Analytics revenue was up 6 percent with security up 9 percent from a year ago.
- Cognitive solutions revenue (Watson, software and transaction processing applications) saw first quarter revenue of $4.1 billion, up 2.1 percent from a year ago.
- Business services revenue fell 3 percent to $4 billion in the first quarter.
- Technology services and cloud platforms delivered first quarter revenue of $8.2 billion, down 2.5 percent from a year ago.
- Systems sales fell 16.8 percent in the first quarter to $1.4 billion.