IBM forecasts upbeat 2022 revenue on cloud strength; flags Russia hit
2022.04.19 23:38
FILE PHOTO: A man stands near an IBM logo at the Mobile World Congress in Barcelona, Spain, February 25, 2019. REUTERS/Sergio Perez
By Chavi Mehta
(Reuters) – IBM (NYSE:IBM) said on Tuesday it expects to hit the top end of its revenue growth forecast for 2022 even as it accounted for a hit of a “few hundred million dollars” from the suspension of its business in Russia.
IBM expects the impact from Russia to be less than “half a percent” of total revenue last year, or a little over $200 million, Chief Financial Officer James Kavanaugh told Reuters.
Servers from IBM, Dell Technologies (NYSE:DELL) Inc and Hewlett Packard Enterprise (NYSE:HPE) Co top the market in Russia. IBM had generated “a couple hundred million dollars” in profit from the region last year, Kavanaugh said.
The century-old company said it expects to hit the higher end of its mid-single-digit revenue growth forecast for this year, after it trounced first-quarter estimates for revenue, energized by its focus on cloud services amid higher global spending on technology.
IBM’s revenue grew 3.9% in 2021. Analysts on average expect annual revenue of $60.69 billion, which implies a 5.8% rise from last year, according to IBES data from Refinitiv.
Having shed its large and laggard IT managed infrastructure business last year, IBM has placed its bets on high-growth software and consulting businesses with a focus on the so-called “hybrid cloud” to put an end to its years of stagnating revenue growth.
Hybrid cloud, in which enterprises use a combination of their own data centers and leased computing resources to store and process data, lets IBM take a dip in the lucrative enterprise cloud market without having to directly compete with large providers such as Amazon.com (NASDAQ:AMZN)’s AWS and Microsoft (NASDAQ:MSFT)’s Azure.
IBM’s cloud revenue grew 14% to $5 billion during the quarter ended March 31.
Revenue from software and consulting segments, which make up over 70% of IBM’s business, rose 12% and 13%, respectively.
Total revenue rose 8% to $14.20 billion during the quarter, beating estimates of $13.85 billion.
