Who says “Almost” only counts in horseshoes?
IBM (IBM) announced a 0.4% year over year decline in third-quarter revenue –making it 22 straight quarters of declining revenue–but the 0.4% drop is the closest that IBM has come to revenue growth in more than five years. Add the company’s projections that revenue would actually grow in the fourth quarter to that “almost” and IBM shares are soaring today, up 9.27% as of noon New York time. That performance has led the Dow Jones Industrial Average to a gain of 0.61%, up 140 points to 23138, for the index’s first move over 23,000. (The 30-stock Dow Jones Industrial Average is a stock price weighted index so a big gain in Dow member IBM at $160 a share has big power to move the entire index.)
The surge in IBM and the move in the Dow Industrials above 23,000 have supported general optimism in the stock market today. The Standard & Poor’s 500 stock index was up 0.09% at noon; the NASDAQ Composite was ahead 0.07%, and the small cap Russell 2000 index had gained 0.54%.
IBM’s newish cloud business was a big driver in the positive results. In the quarter cloud revenue totaled $4.10 billion, a 20% increase year over year.
The other good news came from the hard-pressed legacy mainframe business where a new mainframe server introduced in the third quarter helped the systems business to an increase in revenue. That new product will significantly add to sales in the fourth quarter, Wall Street analysts noted today–although they also added the caveat that mainframe hardware remains a cyclical business.
The company said it expects fourth-quarter revenue of $22 billion to $22.1 billion. That would be an increase of 1.5% from the fourth quarter of 2016. Not much growth but enough to break the string.
