The IBM of u.s. stocks rose nearly 8% before trading on Wednesday, and continued to rise nearly 10% as of press time, after the release of better-than-expected earnings and outlook for the future.
The trend of IBM share price
IBM's fourth-quarter revenue was $21.76 billion, down 3% from $22.543 billion a year earlier and higher than market expectations of $21.7 billion. For the whole of 2018, IBM earned EPS13.81 dollars, higher than analysts' expectations of $13.78, and non-GAAP EPS expectations as low as $13.9 in 2019, higher than market expectations of $13.8.
-IBM Financial report
'This is IBM,'a team of analysts at Morgan Stanley wrote in a report."the cleanest quarter in years.". The results showed that the software industry had a stronger-than-expected rebound after a weak performance in the third quarter. However, Morgan Stanley analysts expect software growth to slow in the first quarter. Katy Huberty, one of the analysts, pointed out that IBM's "transformation" of services was also "bearing fruit", with total service revenue growing by 2 per cent.
In addition, Morgan Stanley raised its forecast for its 2019 EPS becauseOrganic revenue growth and operating leverage in the company's software and services divisions were higher than expected, and the company sold some assets to make up for lost profits and additional restructuring costs.
Not only that, but there is also some other good news. IBM's latest results confirm a recent survey of industry CIOs that "software, analytics and services focus on improving power through hybrid cloud and digital strategies". CIOs have identified cloud computing, digital transformation, and business intelligence / analytics as three development priorities.
"IBM's transformation has been slower than expected, but we believe the company will accelerate its shift to growth as the industry CIO's focus aligns with its strategic planned investment and is linked to the divestiture of non-core businesses," said Mr Morgan. "