IBM focusing on Cloud computing business


American multinational technology company IBM (International Business Machines Corporation)  has dropped some of its legacy business to focus on the high-margin cloud computing business.

       IBM’s cloud strategy may be getting a boost as large corporates accelerate their digital shift due to the coronavirus crisis. Cloud computing is an area that has seen a lot of action in recent years as companies power up their digital shift to boost efficiency. IBM reported a decline of 5.4% in quarterly revenue but its stock has jumped in after-hours trading Monday amid optimism that its push into cloud computing is finally be paying off.

      The total revenue declined from $19.16 billion to $18.12 billion earlier but the revenue from the cloud business rose from 30% to $6.3 billion, previously headed by Krishna. IBM has earned $2.18 per share.

     “The trend in the market is changed as the Clients want to modernise their apps, move more workloads to the cloud and automate IT tasks,” said IBM’s new boss Arvind Krishna

     IBM’s CEO Arvind Krishna in a news release said, “IBM’s clients see the value of IBM’s hybrid cloud platform based on open technologies at a time of unprecedented business disruption. They are committed to building with a growing ecosystem with partners and enduring hybrid cloud platform that will serve as a powerful catalyst for the innovation of their clients and the world.”

     Krishna replaced Ginni Rometty as CEO in April. Krishna has focused on what the company calls a hybrid cloud architecture which provides both an internal and external cloud-based operation for its customers.

     IBM’s business is more concentrated in large enterprises, which in total have been relatively more stable throughout the pandemic according to their client perspective. While the United State and Latin American customers pulled back as the pandemic impact got worse were Western Europe and the Asia Pacific showed a pickup in client spending during June.

      According to IBES data from Refinitiv, IBM’s total revenue fell to $18.12 billion (5.4%) 

but came in above analyst’s estimates of $17.72 billion excluding the impact of business divestitures and currency, revenue declined 1.9%.


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