There are three key takeaways from IBM’s latest earnings report that are indicative of the company’s progress in its ongoing turnaround plan. First, currency is a concern for IBM, as CFO Martin Schroeter said on Tuesday’s call that the U.S. dollar, which has appreciated considerably over the past several months, will have a significant translation impact on IBM’s profit growth. The company’s free cash flow guidance is also important to note. Schroeter said free cash flow would be flat compared to 2014, coming in below consensus, and that may begin to impact IBM’s yearly dividend. Also, IBM’s transition to the cloud is working, but secular changes related to the shift could challenge future revenue growth.
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