IBM CEO Arvind Krishna attended the World Economic Forum in Davos, Switzerland on January 16, 2024.
Stefan Vermuth | Bloomberg | Getty Images
IBM stock fell 5% in after-hours trading Wednesday after the hardware, software and consulting company’s third-quarter revenue fell short of Wall Street expectations.
Here’s how the company performed compared to the LSEG consensus:
Earnings per share: $2.30 adjusted vs. $2.23 expected Sales: $14.97 billion vs. $15.07 billion expected
According to the announcement, IBM’s overall revenue increased by 1.5% compared to the same period last year. Net loss was $330 million, or 36 cents per share, compared with net income of $1.7 billion, or $1.84 per share, in the same period last year.
For the fourth quarter, management expects revenue growth to be similar to the third quarter, excluding the impact of currency fluctuations. Third-quarter revenue increased 2% at constant currency.
In the third quarter, IBM generated $6.52 billion in revenue from software. The figure is up about 10% and beats the $6.37 billion consensus of analysts surveyed by Street Accounts. Revenue from 2019 acquisition Red Hat increased 14% compared to 7% growth in the second quarter. Software gross margin was 83%, higher than other segments.
Consulting revenue decreased 0.5% to $5.15 billion, slightly below the StreetAccount consensus of $5.19 billion. Jim Kavanaugh, IBM’s head of finance, told CNBC’s Seema Modi that the consulting division, like its competitors, continues to face a highly uncertain economic environment.
The company’s infrastructure segment revenue fell 7% to $3.04 billion, below the StreetAccount consensus of $3.24 billion. Kavanaugh told Modi that customers can expect new mainframe computers in the first half of 2025.
IBM now has a generative artificial intelligence business book of more than $3 billion, an increase of more than $1 billion in the second quarter, the statement said.
During the quarter, IBM announced it would expand its network of Oracle product consultants and acquire Oracle services company Accelalpha. The company also completed the sale of QRadar cloud software assets to Palo Alto Networks and the acquisition of StreamSets and webMethods from Software AG.
Excluding after-hours movements, IBM shares are up about 43% since the beginning of the year, while the S&P 500 index is up about 21% over the same period.
Executives will discuss the results with analysts on a conference call beginning at 5 p.m. ET.
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