Minding the Margins, Courting the Cloud
My dears, IBM has presented a most respectable first quarter for 2025, akin to a dowager duchess who knows precisely how to maintain both her estate and her reputation. Revenue crept upward by 1% (2% at constant currency) to a stout $14.5 billion, yet it is the composition of this revenue that brings a twinkle to my eye: Software grew 7%, led by an ebullient 14% rise in Automation and a 12% surge in Hybrid Cloud revenues. Consulting languished slightly, and Infrastructure slipped — but, like an unfashionable cousin, they were carried by stronger members of the family.
Most pleasingly, IBM's gross margins expanded by 170 basis points to 55.2% GAAP — a sign that management's fabled "productivity initiatives" are more than just cocktail party promises. Free cash flow remains firm at $2.0 billion, bolstering a treasury that now exceeds $17.6 billion. Notably, the company invested $7.1 billion in acquisitions, adding another feather — or perhaps a jeweled tiara — to its technology crown.
The risks remain: macroeconomic currents swirl, consulting growth is modest, and debt rose with the HashiCorp acquisition. But IBM has maintained full-year expectations with an air of proper confidence. In my day, a lady maintained her composure even if her petticoats caught fire — and IBM, I daresay, has done just that.
In sum, my dear investors: IBM is not the dazzling young debutante it once was, but it remains a most prudent cornerstone for any portfolio wishing to balance innovation with fiscal decorum.
Granny’s Verdict: Allocate, with the quiet confidence one reserves for fine pearls — dependable, resilient, and always en vogue.
