International Business Machines Corp reported third-quarter revenue that beat analysts’ forecasts, driven by gains in its cloud offerings, an area the company focused on especially after the closure of legacy business units Will do.
The company pulled its full-year forecast in April, citing uncertainty from the coronavirus virus epidemic, refusing to provide any specific guidance on Monday, sending nearly 2.8% shares in extended trading. Earlier this month IBM announced plans to end its division, which manages corporate computer systems and cater to everyone on Internet-based services and artificial intelligence, to help revive the 109-year-old company Goes for
After two years of declining or flat revenue, IBM is closing the unit that handles day-to-day infrastructure service operations and about a quarter of the company’s total sales. But the business has shrunk in recent years as customers have moved more of their operations to the cloud, where IBM competes with rivals such as Microsoft Corp and Amazon.com Inc. Meanwhile, the demand for cloud computing services has increased as companies have moved into it. remote work.
Chief Executive Officer Arvind Krishna took over from Ginni Riometti in April and has moved quickly to cut thousands of jobs as several IBM customers have invested in large software deals during the epidemic. The division of the service unit, which will not be completed until next year, will allow the company to target hybrid-cloud software and services. In 2018, IBM spent $ 34 billion to buy Red Hat to pursue those efforts. Hybrid cloud refers to companies using a combination of their own servers and renting storage and computing power from large providers such as Amazon and Microsoft.
“As we look further, the case for hybrid cloud is clear,” Krishna said on a conference call with analysts. “This is a tremendous opportunity that is valued at $ 1 trillion, much of which lies ahead of the enterprise opportunity.”
New York-based company Semnac said in a statement Monday that sales were down 2.6% to $ 17.6 billion for the three months. It was slightly better than analysts at $ 17.5 billion, on average. The revenue decline was driven by technical support units Global Business Services and Global Technology Services, where the business that will be closed has been placed, which decreases by 4.7% and 3.6%, respectively. Meanwhile, total cloud revenue led by Red Hat grew 19% to $ 6.0 billion, with a 17% drop in sales. IBM released preliminary results earlier this month when it announced the spinoff.
“This is one of the last quarters, where IBM’s backward legacy infrastructure business will pull down performance, as tasks will be completed for NewOco in 2021, which is cloud and AI, rather than IBM, at its strongest performance areas Will focus their attention and investment. ” Nucleus research analyst Daniel Ellman said in a note before the results were released.
Chief Financial Officer Jim Kavanagh said the impact of the epidemic on the economy continues to reduce demand. “The rate and pace of recovery remains uncertain and as a result, we have not seen a fundamental shift in overall demand levels,” he said, adding that IBM said in the current quarter “healthy pipelines across cloud and data platforms ” Huh. .
Third quarter earnings, excluding certain costs, were $ 2.58 per share, beating the average analyst estimate of $ 2.55. Shares closed in New York on Monday at $ 125.52 and declined by 6.4% this year compared to 6% in the S&P 500 index.
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