Over the last few quarters, IBM (Nasdaq: IBM) has been trying to recover from its streak of over five years of revenue declines. It managed to turn the growth around at the end of last year, but there is still a lot more work left to do. It recently reported its first quarter results for the year and while the company reported better than expected results for the quarter, the market remains skeptical about its outlook. The result announcement ended with its stock reporting a decline of 6%.

IBM’s Financials

Revenues for the first quarter grew 5% to $19.1 billion, ahead of the Street’s forecast of $18.83 billion. Adjusted earnings of $2.45 for the quarter were also better than the Street’s estimates of $2.42. The earnings beat was driven by a $810 million tax gain that was recorded during the quarter to account for the US tax law change.

By segment, revenues from Cognitive Solutions, which includes solutions software and transaction processing software grew 6% to $4.3 billion. Global Business Services segment that includes consulting, global process services, and application management grew 4% to $4.2 billion. Technology Services & Cloud Platforms revenues grew 5% to $8.6 billion, Systems revenues improved 8% to $1.5 billion, and Global Financing revenues came in flat at $405 million.

Over the past few years, IBM has gone through a long transition to transform its legacy business in line with the current trends of cloud computing, data analytics, mobile technologies, and security. It refers to these segments as strategic imperatives. For the trailing twelve-month period, revenues from these strategic imperatives grew 12% to $37.7 billion with cloud revenue growing 22% to $17.7 billion. For the quarter, IBM analytics revenues grew 9%, mobile revenues increased 19%, and revenues from security grew 65% over the year.

IBM reiterated an expectation of the year’s EPS of at least $13.80, which was short of the market’s forecast earnings of $13.83 per share.

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