IBM, a provider of IT hardware and services, exceeded estimates for its quarterly revenue but issued a warning that a strong dollar could cause a US$3.5 billion (A$5.1 billion) damage to its foreign exchange earnings for the entire year.
Gains in the dollar versus a basket of currencies over the past year have been attributed to a hawkish US Federal Reserve and increased geopolitical tensions, which has caused businesses with sizable global operations, including Microsoft and Salesforce, to temper expectations.
IBM’s chief financial officer, James Kavanaugh, told Reuters that the company now anticipates a six percent blow to revenue from foreign exchange this year.
It had previously predicted a hit of between three and four percent.
According to Kavanaugh, a higher US currency caused a $900 million decline in second-quarter revenue.
However, according to Refinitiv data, robust demand at IBM’s consulting and infrastructure divisions helped the company report second-quarter sales of $15.54 billion, exceeding analysts’ average forecast of $15.18 billion.
Despite global unrest and inflationary pressures, IBM anticipates sales growth continuing, Kavanaugh said, echoing comments made by Accenture, a rival company, which had stated last month that it did not see a decline in client expenditure.
The 110-year-old business, whose revenue growth had been stagnant for years, split off its sizable and struggling IT-managed infrastructure sector last year and pinned its hopes on fast-growing software and consultancy industries with an emphasis on the so-called “hybrid cloud.” Cloud revenue increased 18% to $5.9 billion USD.
