- Arvind Krishna gave his first earnings report as the tech giant's new CEO, breaking with his predecessor's style by actually leading the call with Wall Street analysts.
- Krishna said the company faces much uncertainty, but he said IBM was well positioned to navigate the coronavirus crisis and vowed more growth "as we emerge from the pandemic."
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IBM on Monday reported its first quarterly earnings under new CEO Arvind Krishna, who showed one way he would be different from his predecessor: Unlike his predecessor Ginni Rometty, he actually led the call with Wall Street analysts.
Krishna, who took over two weeks ago, did not exactly have a stellar quarter to report. Like the rest of tech, IBM reeled in the first quarter from the escalation of the coronavirus crisis. In fact, there's so much uncertainty, IBM withdrew its annual earnings guidance for the year.
"These are unprecedented times, and this quarter is not the time to declare that we have clarity," Krishna told analysts. Other major enterprise tech companies, such as Dell and NetApp, have also withdrawn their financial guidance due to the crisis.
But despite heightened uncertainty in the market, Krishna said IBM was navigating the downturn fairly well and was poised to come out of the crisis stronger.
"I have confidence in our business under different scenarios," he said. "We are entering this environment from a position of strength. The ultimate outcome that I am absolutely committed to is growth for our company as we emerge from the pandemic."
IBM posted a drop in revenue, but beat Wall Street's earnings estimates. The company also posted solid numbers in the business analysts are closely monitoring: Red Hat. IBM bought the open source software powerhouse last year for $34 billion, its biggest acquisition ever.
It appeared to be paying off. Red Hat posted revenue of $1.1 billion, up 20% year-over-year. It was also the second straight quarter that it recorded revenue of over $1 billion.
IBM also touted gains in cloud, where it has struggled against stronger rivals led by Amazon, Microsoft and Google. But IBM reported cloud revenue of $5.4 billion the quarter, and $22 billion over the past 12 months. The company noted that that's "behind only Amazon and Microsoft." IBM said its cloud business now makes up about 30% of its total revenue.
Krishna reaffirmed the two areas where IBM will be focused on under his leadership: hybrid cloud and AI. Hybrid cloud refers to the trend where businesses set up networks on web-based platforms run by the likes of Amazon, Microsoft and Google, while keeping huge chunks of their data and applications in on-premise data centers.
Krishna has said IBM plans to dominate what it projects will be a $1.2 trillion market. He said the sudden pivot to a remote workforce is speeding up this trend.
"I believe that what we are going through today, with the shift to remote work, automation, application modernization will accelerate our clients shift to hybrid cloud," he said. "This gives me immense confidence in our future."
IBM reported a first quarter profit of $1.18 billion, or $1.31 share, compared to a profit of $1.59 billion or $1.78 a share for the year-ago period. Revenue slipped to $17.6 billion from $18.2 billion. Adjusted profit was $1.84 a share.
Analysts were expecting a profit of $1.79 a share on revenue of $17.6 billion.
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