IBM Posts Highest Sales Growth in a Decade, Cuts Cash-Flow Estimate

Demand for mainframe computers, consulting and cloud services remains strong despite concerns of a decline in tech spending.

The company said in a statement that sales increased in the second quarter. The analysts were expecting an average of more than 15 billion dollars. Free cash flow was lowered to $10 billion from an earlier range of $10 billion to $10.5 billion.

The CFO said in an interview that the reduced cash flow forecast is due to the strength of the dollar and the loss of IBM's highly profitable Russia business. He said that their demand remained solid.

In New York, the shares were little changed. IBM has been a rare pocket of stability in the tech market meltdown, with a 3.3% gain this year compared with a 31% loss for the expanded tech sector exchange traded fund.

Big Blue has been trying to pivot from its traditional business of infrastructure and information- technology services to the cloud-computing market. Over the course of Krishna's tenure, IBM has bought more than 25 companies, mostly to bolster the company's hybrid-cloud offerings.

Revenue from hybrid-cloud increased by 18% in the quarter. The software unit revenue increased but was not as high as expected. Sales of consulting increased 10% to 888-492-0 888-492-0s.

Krishna said they expect full-year revenue growth to be at the high end of their model.

Since it was acquired, Red Hat sales have increased 12%. Krishna has used the division as part of his turn-around strategy. The new head of the segment is promising little change in strategy.

Currency is the reason for the growth dip, but there is no material slowdown in the unit.

Infrastructure was the fastest-growing segment in the second quarter due to the release of a new mainframe. The company still makes mainframe computers, which have served as a foundation of a business's most important applications.

IBM spun off a large part of its legacy infrastructure services unit into a new company. IBM sells a lot of Kyndryl.

The growth of tech peers with significant overseas exposure has been affected by the US dollar's strength. The current exchange rates will affect the full-year forecast by six percentage points, up from a three- to-four point estimate in April. The company said currency weighed on growth.

The earnings were higher than the average analyst estimate. The gross margin was better than anticipated. The free cash flow was better than expected.