IBM Corp. is showing signs that it might finally be turning the corner after sustaining revenue growth for the third successive quarter.

The technology giant, which has only recently recovered from 22 straight quarters of decline, saw its second-quarter revenue grow 4 percent from one year ago. It posted earnings after certain costs such as stock compensation of $3.08 per share on revenue of $20 billion, nudging past Wall Street’s expectations of $3.04 per share on revenue of $19.85.

Investors for once displayed big enthusiasm at IBM’s prospects, with its share price rising more than 3 percent in after-hours trading.

In another positive sign, more than half of IBM’s revenue came from what it calls its strategic imperatives, which includes areas such as social, mobile, analytics and cloud. These segments pulled in $10. 1 billion in revenue, up 15 percent from one year ago and up 26 percent from the previous quarter. In the first quarter, these categories accounted for 47 percent of IBM’s revenue.

“IBM turned in a satisfyingly positive quarter, the third in a row, leading to a boost for its shares in after-hours trading,” said Charles King, an analyst with Pund-IT Inc. “The company achieved that by beating analysts’ gloomy earnings expectations and enjoying significant growth and progress from some not entirely expected quarters.”

One of those surprises was IBM’s Systems business segment, which covers much of the hardware the company sells. The Systems unit came in ahead of estimates with $2.18 billion in revenue, driven by what analyst Patrick Moorhead of Moor Insights & Strategy said was a solid customer appetite for IBM’s latest IBM Z z14 mainframes and POWER9 systems.

“IBM had a solid second-quarter earnings report that was buoyed by hardware, of all things,” Moorhead said. “The IBM Systems division nailed it, driving 25 percent growth in Power Systems, storage and Z mainframes.”

In a conference call, IBM Chief Financial Officer James Kavanaugh also singled out the mainframe’s performance, describing it as the “most enduring platform that you’ve seen out there.”

The mainframe is a rock that IBM should be able to lean on for some time to come, another industry expert said. Chris O’Malley, chief executive officer at Compuware Corp., which sells mainframe software, said the venerable platform remains a vital one for many large organizations that will continue to use it as their foremost platform for mission-critical computing workloads.

“Compuware can confirm this resurgent trend based on our growth in new license bookings and the customer reception to our most recent acquisitions and partnerships,” O’Malley said.

Aside from hardware, IBM’s all-important cloud segment also did well, growing by 23 percent year-over-year to $4.7 billion in revenue, while the annual revenue run rate for cloud delivered as a service was $11.1 billion, up 26 percent year-over-year.

“We delivered strong revenue and profit growth in the quarter, underscoring IBM’s progress and momentum in the emerging, high-value segments of the IT industry,” IBM Chief Executive Ginni Rometty said in a statement.

Rometty’s optimistic outlook might be justified, but IBM still has room for improvement, with Pund-IT’s King noting that revenue from company’s largest business in terms of revenue, its Technology Services and Cloud Platforms, was flat in the quarter at $8.62 billion. He said IBM’s Cognitive Computing division, which includes its Watson offerings, also disappointed, with revenue falling by 1 percent.

Even so, King said the quarter was overall a very positive one for IBM.

“While beating pessimistic analysts is always great, the more important point of IBM’s performance is increasing evidence of the synergies Ginni Rometty has been seeking from the company’s ‘strategic imperative’ investments,” King said. “Nearing the goal of driving half of all revenues is satisfying, but more important are the ways in which those groups are helping to sustain and lift its traditional businesses. That’s excellent news for IBM and the company’s shareholders.”

Photo: IBM