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IBM stock rose after the company released better-than-expected earnings for the third quarter of the year on Tuesday.
IBM came close to stopping the drought of revenue growth that lasted for 21 quarters, but didn't manage to do that in the end. IBM revenue has now declined for 22 quarters in a row. Still, the stock went up more than 3 percent in after-hours trading shortly after the earnings beat. Subsequently, during the company's call with financial analysts, IBM stock was trading 5 percent above the closing price of $146.54.
In terms of guidance, IBM expects to finish the calendar year with at least $13.80 in earnings per share, the company said in a statement. Analysts were expecting $13.75 in earnings per share for the entire year, according to Thomson Reuters.
IBM continues to look to its strategic imperatives -- analytics, cloud, mobile and security -- for growth that can counteract the decline of legacy parts of its business, and that segment delivered $8.8 billion in revenue, up 11 percent year over year. Almost 46 percent of all of the company's revenue for the quarter came from its strategic imperatives, in fact. Cantor Fitzgerald analysts Joseph Foresi and Michael Reid had previously predicted strategic imperatives would contribute about 47 percent of Big Blue's third-quarter revenue.
Cloud revenue, including cloud delivered as a service, for the quarter was $4.1 billion, up 20 percent from last year. IBM said it had a $9.4 billion annual revenue run rate for cloud delivered as a service based on third-quarter revenue, up 7 percent from $8.8 billion in the second prior quarter and up 25 percent year over year.
Across all five of IBM's main business segments, the company beat analysts' estimates on revenue, according to StreetAccount.
IBM's Technology Services and Cloud Platforms business segment did $8.5 billion in revenue in the quarter, down 3 percent year over year, while Cognitive Solutions segment brought in $4.4 billion in revenue, up 4 percent.
IBM's Global Business Services segment produced $4.09 billion in revenue, down 2 percent, and its Systems segment got $1.72 billion in revenue, up 10 percent.
In the third quarter, IBM said it was committing to back an artificial intelligence research lab in conjunction with the Massachusetts Institute of Technology. The company also announced a collaboration around blockchain technology with Dole, Kroger, Unilever and Walmart, among other companies.
IBM stock is down 11.5 percent since the beginning of the year.
The company's customer engagement and security businesses "have a hot hand" and should contribute to revenue growth in the fourth quarter, IBM CFO Martin Schroeter told analysts during the conference call.