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IBM revenue posts fastest annual growth in a decade

IBM Corp on Wednesday reported its biggest annual revenue growth in a decade and beat Wall Street expectations for the fourth quarter as more companies look to streamline operations and save costs amid an economic downturn.

The software and IT consulting firm also forecast single-digit annual revenue growth in constant currency terms, weaker than the 12% reported for 2022, but in line with the medium-term targets announced for 2021.

Analysts raised concerns whether IBM would be able to deliver given the turbulent macroeconomic backdrop.

The slower growth forecast comes after a boom during the pandemic, when companies spent on digitizing their operations. Now, rising borrowing costs and recession fears are forcing companies to tighten spending.

Still, IBM Chief Financial Officer James Kavanaugh told Reuters on Wednesday that the company is seeing its consulting business grow in terms of cloud spending.

Deal signups doubled in 2022 to set up services with partners like Amazon.com’s AWS and Microsoft’s Azure, he said.

“Enterprise customers are looking for how they can best optimize their application portfolio and consumption requirements.”

Analysts also expect digitization and cloud-related contracts to remain more resilient than other IT projects.

IBM’s annual revenue grew 5.5% to $60.53 billion thanks to its shift to a so-called “hybrid cloud” strategy — in which the company helps customers set up their own data centers and use resources leased computing.

Its hybrid cloud revenue increased 2% to $6.3 billion in the reported quarter.

The 110-year-old company, which derives more than half of its revenue outside the United States, said it expects a currency-neutral impact on its business this year as the US dollar weakens. It recorded a currency impact of more than $1 billion during the fourth quarter.

Total revenue came in at $16.69 billion for the quarter ended Dec. 31, compared with analyst estimates of $16.40 billion, according to Refinitiv data.

IBM’s fourth-quarter net income was $2.9 billion.

(Reporting by Chavi Mehta in Bengaluru)

Source: CNN Brasil

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