IBM: We're now a, what's not losing money? Ah, a cognitive cloud champ!

IBM topped analyst expectations in its third quarter of the year, but still couldn't shake a run of falling revenue that now stands at 5 and a half years long.

Big Blue credited strong returns from its cloud and cognitive businesses along with a boost from its recent mainframe refresh in helping it top $19bn of total revenues on the 2017 Q3 ended September 30. Here's a summary of the figures out today:

• Revenues of $19.15bn were down 0.4 per cent from the year-ago quarter's $19.22bn, but ahead of analyst estimates at $19.0bn.
• Net income was $2.73bn, down 4 per cent from Q3 2016's $2.85bn take.
• Earnings per share (non-GAAP) were $3.30, beating estimates of $3.28
• Systems revenue jumped 10 per cent to $1.7bn, thanks in large part to the 62 per cent surge in Z systems mainframes following July's refresh. Given the 3-4 year product refresh cycle for IBM mainframes, that performance can not be expected to carry on. Power systems revenue, meanwhile, was down 8 per cent, while storage revenues were up 4 per cent.
• Technology services and cloud unit revenues were down 4 per cent at $8.5bn. Cloud itself, however, was up 20 per cent with $4.1bn of revenues. The strategic imperatives unit logged $2.6bn in revenues, up 12 per cent.
• Cognitive solutions recorded $4.4bn in revenue, up 3 per cent from Q3 2016.
• Global business services revenues were $4.09, down 2 per cent from $4.19bn the year-ago quarter.

"Ninety days ago, I talked about planting the flag to mark the beginning of an improvement of the trajectory of our business, which would result in a second half that was improved over the first," IBM's chief financial officer Martin Schroeter told analysts on a conference call today.

"Now in the third quarter, we’ve improved our year-to-year revenue and margin trajectory. This was led by strong performance in our Cognitive Solutions and Systems segments. And our strategic imperatives revenue across our segments grew at 10 percent, reflecting our success in embedding cognitive and cloud into more of what we offer.

"We’re embedding cloud and cognitive capabilities across our business, and our strategic imperatives, as we’ve said, are a signpost of the progress we’re making in helping our enterprise clients to extract value from data, and become digital businesses. And so our strategic imperatives aren’t separate businesses, but a view of the revenue across our segments that provide our clients with analytics, cloud, security, mobile and social capabilities."

Topping analyst expectations sent investors on a buying run, and IBM stock was up 5 per cent in after-hours trading at $154. While the numbers are up in a handful of what IBM says are key businesses, analysts caution it is still too soon to bank on a Big Blue bounce-back.

"Overall, we continue to believe that IBM is still very much in the throes of a turnaround,with success uncertain," notes analyst house AB Bernstein.

Elsewhere, IBM finds itself facing a rather embarrassing bill from the state of Louisiana, where it failed to live up to its promise to bring about 800 new jobs in exchange for grants and tax breaks.

The Advocate reports that operations in the Baton Rouge parish have only managed to kick up about 587 of the promised 800 new positions, meaning IBM now has to pay back the parish $1.5 million, or $6,495 for each job it fell short of creating. ®