IBM revenue disappoints as software sales mark rare decline

NEW YORK: IBM Corp missed Wall Street estimates for quarterly revenue on Thursday, hurt by a rare sales decline in its software unit as clients shied away from longer-term deals due to pandemic-induced economic uncertainty.

The 109-year-old firm is preparing to split itself into two public companies and the namesake firm will focus on the so-called hybrid cloud, where companies use a combination of their own datacenters and leased resources to manage and process data.

Revenue from its cloud-computing business rose 10% to a record $7.5 billion in the fourth quarter, with IBM saying it is confident of returning to sales growth in 2021 and expected revenue to grow in mid-single digits after the separation.

That was not enough to convince investors, however, as the company’s shares dropped 6.7% to $122.98 in extended trading after IBM’s fourth consecutive quarter of sales decline.

Sales from cloud and cognitive, which houses IBM’s software offerings and its biggest unit, declined 4.5% to $6.8 billion after two years of growth.

Total revenue fell 6.5% to $20.37 billion, missing analysts’ average estimate of $20.67 billion, according to IBES data from Refinitiv.

Excluding items, IBM earned $2.07 per share, above estimates of $1.79.