After a year of steady decline, International Business Machines (IBM) finally returned to sales growth in the first quarter, beating Wall Street targets on Monday. The company's shares were up more than 4% in addition to the 6% it gained so far this year.
Finance chief James Kavanaugh said cloud spending by companies in the retail, manufacturing, and travel industries in the U.S are picking up after the stagnation caused by the first wave of COVID-19.
Sales from IBM's cloud computing services rose 21% to amount to $6.5 billion in the quarter. IBM is preparing to divide itself into two public companies, with the firm shifting its focus on the hybrid cloud, where the company estimates a $1 trillion market opportunity.
The Big Blue recorded a sales reduction in the global tech sector, its largest unit, but that was sidelined by a rise in revenue in the remaining three units which included a surprise growth in the business that hosts mainframe computers.
The financial service industry accepted the mainframe as the banking clients shopping for more capacity due to high trading values, said CFO Kavanaugh.
Net income fell to $955 million in the quarter that ended on March 31, from $1.18 billion, a year earlier.
The company earned $1.77 per share, surpassing the market expectation of $1.63.
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