Oct 21 : IBM finance chief James Kavanaugh on Wednesday said delayed software deals that rattled investors in the last quarter were beginning to close, as the company lifted its forecast for the business and reported better-than-expected third-quarter earnings.
In an interview with Reuters, Kavanaugh said IBM now expects annual software revenue growth of about 7 per cent to 8 per cent, up from 6 per cent to 8 per cent previously. IBM's shares rose about 4 per cent in extended trading.
Here are some more details:
• Third-quarter revenue rose 4.7 per cent to $17.10 billion, above analysts' average estimate of $16.82 billion, according to data compiled by LSEG
• Adjusted profit came in at $2.95 per share, beating estimates of $2.86 per share
• CEO Arvind Krishna had said in July that IBM had "faltered" in adapting to a shift in customer spending from software to data-center infrastructure, triggering its steepest one-day share drop in over a century
• Software revenue rose 8.3 per cent to $7.80 billion in the third quarter, topping estimates of $7.62 billion
• Within the segment, sales in its hybrid cloud unit grew 11 per cent and transaction processing software revenue rose 9 per cent, rebounding from an unexpected decline last quarter
• Kavanaugh said about 25 per cent of the transaction processing revenue came from deals deferred from the second quarter and "the remaining 75 per cent is net new business"
• Infrastructure revenue rose 4.2 per cent to $3.71 billion, as 31 per cent growth in distributed infrastructure, which includes servers and storage systems, helped offset weakness in its Z mainframe business