IBM's revenue inched up 0.3% year over year to $17.6 billion. Wall Street had been anticipating sales of nearly $17.8 billion.
Even after adjusting its results to reflect the upcoming sale of its Kyndryl managed infrastructure business, IBM's revenue rose only 2.5%. The company's key cloud and cognitive software business, which includes Red Hat, delivered sales of $5.7 billion, a 2.5% increase. That, too, was slightly below analysts' estimates for revenue of $5.8 billion.
CEO Arvind Krishna tried to reassure shareholders that better times lie ahead. "With the separation of Kyndryl early next month, IBM takes the next step in our evolution as a platform-centric hybrid cloud and AI company," Krishna said in a press release. "We continue to make progress in our software and consulting businesses, which represent our higher growth opportunities."
All told, IBM's adjusted earnings per share fell 2% to $2.52.
Still, IBM continues to produce bountiful cash flow. It generated operating and adjusted free cash flow of $16.1 billion and $11.1 billion, respectively, which were both up slightly from the prior-year quarter. The tech giant is prudently using some of that cash to pay down debt and return cash to shareowners. Its stock pays a sizable dividend, which currently yields 5.1%. So, while growth-focused investors might find IBM's stock unappealing, income seekers could find it more attractive.