This is how the company did it:
- Merits: Adjusted for $ 2.58 per share versus $ 2.58 per share as analysts expected, Refinitiv said.
- Revenue: According to Refinitiv, $ 17.56 billion versus $ 17.54 billion as analysts expected.
Sales were down 2.5%, according to a statement, declining for the third straight quarter on an annualized basis. The pattern of declining revenue under new CEO Arvind Krishna was common during the tenure of his predecessor Ginni Rometty. The coronavirus pandemic has challenged IBM, among other things, due to exposure to industries such as retail and transportation that were disrupted by the pandemic.
Krishna announced a major change on October 8, saying that the managed infrastructure services portion of the IBM Global Technology Services unit would become a separate public company. At the time, IBM announced preliminary results, forecasting adjusted earnings per share of $ 2.58 on revenue of $ 17.6 billion. During a conference call with analysts on the day of the announcement, Krishna said IBM expects “medium-term sustainable sales growth in the mid-single-digit range”.
In the third quarter, Global Technology Services, IBM’s largest, contributed $ 6.46 billion to revenue. That’s 4% less than last year and more than the FactSet consensus estimate of $ 6.25 billion.
Cloud and cognitive software, which includes Red Hat, had sales of $ 5.55 billion, up 7% and more than the FactSet consensus of $ 5.48 billion.
Global Business Services revenue was $ 3.97 billion, down 5% and more than the consensus of $ 3.90 billion. System revenue was $ 1.26 billion, 15% below the consensus of $ 1.55 billion.
The company’s free cash flow of $ 1.10 billion was below the FactSet consensus of $ 2.26 billion and was the lowest since the first quarter of 2001, according to FactSet.
IBM issued its forecast for the full year in April. The company didn’t release any new guidance in Monday’s income statement.
In the third quarter, IBM announced the acquisition of WDG Automation, a Brazilian software company.
IBM stock has fallen 6% since the beginning of 2020. The S&P 500 index is up about 6% over the same period.
Executives will discuss the results with analysts on a conference call starting at 5:00 p.m. Eastern time.
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SEE: Full interview with IBM CEO Arvind Krishna and Executive Chair Ginni Rometty
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