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It took 23 tries, but IBM is finally back to growth

Reuters/Brendan McDermid
Rometty probably feels like this right now.
  • Mike Murphy
By Mike Murphy

Technology editor

Published This article is more than 2 years old.

After nearly six full years, IBM has managed to bring in more revenue in a quarter than it did in the same quarter a year before. The last time that happened Lyft and Blue Apron didn’t exist, and “Call Me Maybe” by Carly Rae Jepsen was top of the charts.

The company announced its fourth-quarter earnings Thursday, Jan. 19. And after the better part of a decade, the company has returned to growth, posting $22.5 billion in revenue for the quarter, up about 3% from the $21.8 it generated in the fourth quarter of 2016.

Wall Street was not particularly enthused by CEO Ginni Rometty’s feat, however. IBM’s stock price plunged in after-hours trading, opening down about 4.5%, or $7, from yesterday’s closing price, as analysts were downbeat on the company’s profit outlook for 2018. And, indeed, IBM investors have yet to find themselves back in the company’s glory days as shown by the adjusted stock price chart below.

Much of company’s increase in revenue could be put down to sales in its new Z14 mainframes, but there were some positive signs for the future: Its cloud business revenue was up 27% year-over-year to $5.5 billion. That being said, IBM’s tentpole AI research, its Watson program, which Rometty has committed to spending $1 billion on trying to sell AI solutions to multinationals but has struggled to gain traction, wasn’t mentioned once in its press release this time.

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