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IBM revenue falls in COVID-19-plagued first quarter

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IBM CEO Arvind Krishna.
IBM CEO Arvind Krishna.

Computing giant International Business Machines (IBM) saw its revenue dip in the first quarter of 2020, as sales slowed because of the COVID-19 pandemic.

IBM yesterday announced its 2020 first quarter results, with new CEO Arvind Krishna withdrawing the 2020 annual forecast in light of the COVID-19 crisis. Krishna replaced Ginni Rometty as CEO earlier this month.

IBM posted revenue of $17.6 billion, down 3.4%.

“Looking at the first quarter, through February, we were tracking roughly in-line with our expectations,” says chief financial officer James Kavanaugh.

“As we got into March, the health situation and resulting social distancing became more widespread. As you would expect, we saw noticeable change in client priorities.”

“IBM remains focused on helping our clients adapt to the immediate challenges of the COVID-19 pandemic, while we continue to enable them to shift their mission-critical workloads to hybrid cloud and expand their use of AI to help transform their operations,” says Krishna.

“Our first-quarter performance in cloud is a reflection of the trust clients place in IBM’s technology and expertise today, and positions us to continue building an enduring hybrid cloud platform for the future.”

Cloud and cognitive software was up 5%, systems up 3%, with flat global business services.

The company posted total cloud revenue of $5.4 billion, up 19%. It reported cloud revenue of $22 billion over the last 12 months, up 13%. Red Hat revenue was up 18%.

In the first quarter, the company generated net cash from operating activities of $4.5 billion, or $2.1 billion excluding global financing receivables.

IBM’s free cash flow was $1.4 billion, and it returned $1.4 billion to shareholders in dividends.

It ended the first quarter with $12 billion cash on hand, which includes marketable securities. Debt, including global financing debt of $22.3 billion, totalled $64.3 billion – down $8.7 billion since the end of the second-quarter 2019.

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