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IBM reports biggest sales growth in ten years

The company was buoyed by strong demand for its software unit, which includes its hybrid cloud offering

IBM reported its biggest sales growth in the last ten years in its first quarterly earnings report following the spinoff of Kyndryl.

Sales increased by 6.5% to 16.7 billion in the quarter between October and December, while IBM’s software unit, its biggest business group, grew by 8.2% to $7.3 billion. Its consulting unit also reported $4.7 billion in revenue, up 13%, while its infrastructure revenue was flat, up 2% to reach $4.4 billion.

Hybrid cloud revenue also grew to $6.2 billion, an increase of 16%. Red Hat sales led this area, which increased by a total of 19%. For the full year, hybrid cloud revenue took in $20.2 billion, up by 20% overall.

"We increased revenue in the fourth quarter with hybrid cloud adoption driving growth in software and consulting," said Arvind Krishna, IBM chairman and chief executive officer. "Our fourth-quarter results give us confidence in our ability to deliver our objectives of sustained mid-single digit revenue growth and strong free cash flow in 2022."

Krishna continues to make strategic moves for the business, as yesterday IBM entered into an agreement to sell its Watson Health assets to private equity firm Francisco Partners. The deal will allow IBM to focus on its platform-based hybrid cloud and AI strategy. Although terms of the deal weren’t announced, there were reports that the value of the assets being sold was over $1 billion.

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"In 2021, we continued to invest for the future by increasing R&D spending, expanding our ecosystem and acquiring 15 companies to strengthen our hybrid cloud and AI capabilities," said James Kavanaugh, IBM senior vice president and chief financial officer.

"With the separation of Kyndryl we now have taken the next step in the evolution of our strategy, creating value through focus and strengthening our financial profile."

This is the first earnings report after IBM completed the spinoff of Kyndryl in November, which it hoped would give the business more freedom to pursue new opportunities. Its first major deal following the split was with Microsoft, where it was set to develop new products built on the Microsoft Cloud to drive digital transformation for customers.

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