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IBM First-Quarter Earnings Report Tops Consensus Estimates

IBM (IBM) reported first-quarter earnings after the market close Tuesday that beat analyst views on the top and bottom lines, but the stock fell in after-hours trading.

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The tech icon reported revenue of $19.1 billion, beating the consensus estimate of $18.8 billion and up 5% from the year-ago quarter. It's the second quarter in a row of quarterly gains, which broke a near six-year string of quarterly revenue declines. IBM reported adjusted earnings of 2.45 per share, beating the consensus estimate of $2.41.

IBM said it remains on target to meet its adjusted earnings objective of at least $13.80 a share. The current consensus estimate is $13.83 a share.

Shares were down 5%, near 152.10, during after-hours trading on the stock market today.

Making Changes

IBM has undergone a major and lengthy transition, casting off old businesses and emphasizing cloud computing, data analytics, mobile technologies, and security, which it refers to as strategic imperatives.

The company said revenue from strategic imperatives — led by cloud and security — grew 15% in the first quarter to $9 billion. Over the past 12 months, revenue from strategic imperatives reached  $37.7 billion and represented 47% of total revenue. Cloud revenue in the quarter rose 20% from the year-ago period to $4.2 billion. Security revenue grew 65%.

"Revenue, operating net income and free cash flow increased in the quarter, with broad-based improvement in our gross margin trajectory, as we continue to deliver shareholder value," said James Kavanaugh, IBM chief financial officer, in prepared remarks with the earnings release.