IBM REVENUE DOWN AS SOFTWARE SALES DECLINE

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, Reuters reported.

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.

“Our performance reflects the fact that our clients continue to deal with the effects of the pandemic and broader uncertainty of the macro environment,” said Chief Executive Officer Arvind Krishna, who took helm last April.

“This puts additional pressure on larger software transactions this quarter and project delays in some services engagements.”

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