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IBM delivers Q2 revenue growth, IBM Z leads hardware gains

Big Blue's as-a-service revenue hit an annual run rate topping $11 billion, but the big growth was put up by the hardware unit.

IBM delivered second quarter revenue growth of 4 percent from a year ago in a sign that the company may be turning the corner.

Big Blue reported non-GAAP second quarter earnings of $3.08 a share on revenue of $20 billion. Wall Street was expecting IBM to deliver non-GAAP second quarter earnings of $3.04 a share on revenue of $19.85 billion. IBM delivered its second consecutive quarter of revenue growth following a solid first quarter.

The company said its cloud as-a-service revenue was at an annual run rate of $11.1 billion. IBM also showed revenue growth of 15 percent for its "strategic imperatives" revenue, which includes analytics, security, cloud and Watson.

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Hardware, led by IBM Z systems, delivered the strongest revenue growth in the quarter.

CEO Ginni Rometty said IBM is making progress in "high-value segments of the IT industry."

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IBM also noted that it was performing well in hybrid cloud efforts as well as analytics, which saw revenue up 7 percent.

By unit, IBM's cognitive solutions division had revenue of $4.6 billion, flat compared to a year ago.

  • Global business services revenue was $4.2 billion, up 2 percent from a year ago.
  • Technology services and cloud platforms had second quarter sales of $8.6 billion, up 2 percent from a year ago.
  • Systems revenue was $2.2 billion, up 25 percent due to growth in IBM Z mainframes. IBM launches 'skinny' Z mainframe designed for 19-inch standard data center rack
  • For the year, IBM said it expects non-GAAP earnings of at least $13.80 a share with free cash flow of about $12 billion.
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