IBM Corp missed Wall Street estimates for quarterly revenue, hurt by a infrequent earnings decline in its software unit as customers shied away from longer-term prices as a result of pandemic-induced financial uncertainty.
The 109-year-old company is preparing to split itself into two public companies and also the namesake firm will concentrate on the so-called hybrid cloud, where firms use a mixture of their own datacenters and leased assets to handle and process information.
Revenue from the cloud-computing business rose 10% to a record $7.5 billion from the fourth quarter, together with IBM saying it’s confident of returning to sales increase in 2021 and expected revenue to grow in mid-single digits following the separation.
That wasn’t enough to convince investors, however, as the company’s stocks dropped 6.7% to $122.98 in extended trading after IBM’s fourth consecutive quarter of sales decrease.
“Our performance reflects the fact that our clients continue to deal with the effects of the pandemic and broader uncertainty of the macro environment,” said CEO Arvind Krishna, that took helm last April.
Revenue from cognitive and cloud, which homes IBM’s software offerings and its biggest component, declined 4.5% to $6.8 billion following two years of expansion.
Still, Chief Financial Officer James Kavanaugh told journalists at our partner news agency Reuters an accelerated transfer to cloud by businesses, a sales rebound in the global business services unit and a weaker dollar make the business confident of returning to earnings growth this past year.
Total earnings fell 6.5% to $20.37 billion, missing analysts’ average estimate of $20.67 billion, based on IBES data from Refinitiv.
The team at Platform Executive hope you have enjoyed this news article. Translation from English to other languages via Google Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Munsif Vengattil in Bengaluru. Editing by Devika Syamnath.
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