Cash-rich IBM is building its cloud business and looks set to continue in this direction. With Red Hat safely on board, IBM's Q2 revenue declined for the second quarter in a row as the pandemic put the expected pressure on cognitive software and global technology sales. but shares rose on the report that Red Hat revenue was up 17% Y/Y.
Revenue breakdown: Global Technology Services, $6.32B (-8% Y/Y; consensus: $6.2B); Cloud and Cognitive Software, $5.75B (+3%; consensus: $5.74B); Global Business Services, $3.89B (consensus: $3.72B); Systems, $1.85B (+6% Y/Y; consensus: $1.6B).
Global Technology was down on the year due to declines in application management and consulting, but total cloud revenue was up 30% to $6.3B. Gross profit margin was 48%, one percentage point above consensus.
IBM ended the quarter with $14.3B of cash on hand including marketable securities, up from $5.2B at the end of last year.
