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With 5 years of declining revenue, IBM is all in on profits: 'It's easy to get revenue,' CFO says

  • IBM posted mixed second quarter results, as earnings per share exceeded expectations but revenues fell short.
  • IBM did see a big 15 percent jump in cloud revenue.

Despite posting 21 quarters of year-over-year revenue declines, IBM is always looking for "profit pools" in enterprise technology, Martin Schroeter, IBM's senior vice president and chief financial officer, told CNBC's "Closing Bell" on Tuesday.

Big Blue reported earnings after the bell, posting mixed second quarter results, as earnings per share exceeded expectations but revenues fell short.

"It's easy to get revenue in an enterprise space," Schroeter said. "It's finding the profit that we're focused on."

The iconic technology company has struggled over the past five years to grow revenues as it transitions from traditional business tools, like mainframes, to new fields like artificial intelligence, cybersecurity and cloud.

IBM did see a big 15 percent jump in cloud revenue in the second quarter, hitting $3.9 billion in sales. Schroeter said that IBM thinks it's still "kind of early" in the transition to cloud computing.

President and CEO of IBM Ginni Rometty
Paul Morigi | Fortune | Time Inc | Getty Images
President and CEO of IBM Ginni Rometty

"Another good quarter for us in cloud, I think," Schroeter said. "The reason [customers] move to the cloud is that they are really looking for our expertise .... They need to know that their data is going to be not only secure, but that the insights and their AI models — they need to know that that's going to be theirs."

IBM has at least one cheerleader — famous investor Warren Buffett, who has praised IBM's cognitive intelligence, Watson, as a valuable experiment. But some, like Social Capital CEO Chamath Palihapitiya, have deemed the technology a "joke."

Schroeter said that if Palihapitiya was truly dismissive of Watson, he wouldn't bring it up to begin with. Schroeter also noted that many of Watson's biggest markets are overseas.

"He's a competitor, so who wouldn't be out disparaging competitors," said Schroeter. "Watson's seen and helped 40,000 patients and doctors work together. I don't think 40,000 patients and doctors, and that relationship, I'd classify as a joke."