IBM announces first quarter of revenue growth after almost six years - and 22 quarters - of straight decline

Finally!

IBM has finally filed a quarter of increased revenues after 22 quarters of declining turnover.

The company attributed stronger than expected growth in cloud computing and demand for IT security software and services for its performance.

The company achieved revenues of $22.5 billion in the fourth quarter, up a four per cent overall, year-on-year, but just one per cent in constant currency.

For the full year, the company achieved revenues of $79.1 billion, down by more than one-fifth from its 2008 peak of $102.8 billion.

However, IBM still filed a fourth-quarter net loss of $1.05 billion as a result of taxes imposed by its repatriation of overseas profits - just as Apple has more recently done.

In terms of revenue growth, its cloud and IT hardware businesses posted the strongest revenue growth.

The hardware sector, of which only only high-end servers and mainframes are now left, were boosted by the release of new encryption friendly Z Systems mainframes in the middle of the year, encouraging a new upgrade cycle.

In cloud, meanwhile, the company claimed a 27 per cent increase in revenues, up to $5.5 billion, for all public, private and hybrid cloud sales. The company was also keen to highlight its "innovation leadership" in 2017 in "artificial intelligence, cloud, security, blockchain [and] quantum [computing]".

Revenus in its Security division, meanwhile, leaped 127 per cent to $1.5 billion.

On the minus side, IBM Global Services fell by two per cent, year-on-year to $4.2 billion, and its Cognitive Solutions business was flat at $5.4 billion. Cognitive Solutions encompasses business intelligence, including its Watson analytics, and transaction processing software.

IBM's results were all the better for having lowered investors' and analysts' expectations through the past six or so years, according to Lou Miscioscia, an analyst at Pivotal Research, talking to Reuters.

In a conference call, IBM's chief financial officer James Kavanaugh said that "tax will be a headwind in 2018", but that the company would "maintain a high level of investment".

Kate Hanaghan, analyst at TechMarketView, suggested that IBM is now back on track. "After 22 quarters of revenue decline, IBM returned to growth in the fourth quarter of 2017," she said.

She continued: "At constant currency, IBM grew its top line by one per cent to $22.5 billion. For a company of IBM's size and portfolio mix that is not as pitiful as it sounds.

"Indeed, if it can sustain and improve upon this in coming quarters that would be a very positive indicator that its shift to "strategic imperative" areas is producing the intended result."

She added that sectors such as cloud have helped the company to slowly turnaround.

"Looking back at the year as a whole, cloud (including as-a-service), its performance in systems (IBM Z, Power and storage), greater software transactional revenue, and improvements in consulting (led by digital offerings) were key growth drivers," said Hanaghan.