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IBM Gives Update on Its Move Toward the Cloud With Q1 Report

Having divested much of its older hardware-focused units, Big Blue now has to show it can grow its software and cloud businesses.

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Computing giant IBM will give the latest update on its transformation into a company focused on software and cloud computing services when it reports quarterly earnings later today.

Analysts surveyed by Thomson Reuters expect Big Blue to post a profit of $2.82 per share on revenue of $19.7 billion. They further expect second-quarter guidance from IBM that is in line with earnings of $3.98 per share on sales of $21.3 billion.

Sales at IBM have been declining as the company last year sold off some lagging business units that accounted for about $7 billion in annual sales, including commodity servers and its semiconductor manufacturing unit.

Since then, Big Blue has been emphasizing its cloud computing unit SoftLayer and selling its software as cloud-delivered applications. Cloud computing and applications reached about $7 billion in annual revenue last year. That unit won a significant deal with the U.S. Army earlier this month.

In addition to the cloud, IBM has also set some aggressive goals to boost its data analytics and mobile software businesses. In February, the company said it would invest $4 billion in these initiatives in a bid to build a business which, when combined with cloud computing, would be worth $40 billion in annual revenue by 2018.

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