IBM shares fell as much as 4% after the company trimmed its cash forecast. The top and bottom lines were close.
The company did what it was supposed to.
According to a statement, IBM's revenue increased in the quarter. In the year-ago quarter, income from continuing operations was $8210 million. IBM spun off its managed infrastructure services business into a publicly traded company.
The range of free cash flow that it provided in April was $10 billion to $10.5 billion. The executives maintained their plan for constant-currency revenue growth at the high end of their model. There was a range of 3% to 4% in April for IBM's foreign-exchange revenue.
In the second quarter, IBM reported $6.17 billion in software revenue, but it was below the $6.3 billion analysts were expecting.
The consulting division of the company generated $4.81 billion in revenue, which was 10% higher than the StreetAccount consensus.
IBM's infrastructure unit contributed $4.24 billion in revenue, up almost 19% and well above the StreetAccount consensus. IBM began selling its latest mainframe on May 31. Revenue grows at the beginning of each mainframe cycle as customers upgrade. The first quarter saw a decline in sales of the products.
In the quarter, IBM announced a plan to acquire a cybersecurity startup, and Francisco Partners closed its acquisition of IBM's health care data and analytic assets.
In the year-ago quarter, IBM's gross margin was 55.3%. Results in the consulting arm were impacted by the labor market.
IBM shares were up 3% so far this year while the S&P 500 index was down 20%.
The results will be discussed on a conference call by executives. There is an hour and a half later.
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