IBM reports strong business and big loss
10/20/2022 7:37 am
Despite a strong dollar, tech giant IBM’s business is solid. Sales increase in the summer. However, due to a one-off effect, the third quarter ended with a loss of billions.
US group IBM fell deep into the red in the summer due to special charges. At the same time, the US company reported strong business day-to-day. Revenue rose 6 percent year over year in the third quarter to $14.1 billion. According to the information, the reason was mainly higher demand in the software, consulting and infrastructure segments. IT group management was more confident in full-year sales.
CEO Arvind Krishna now sees sales “above our model,” which forecasts growth in the mid-single-digit percentage range. In July, he still saw sales “at the high end” of the previous forecast range. The group is actually suffering from the strong dollar, which is reducing foreign earnings in US currency. However, the annual report indicates relatively strong demand for cloud software and IT services despite global inflation and economic concerns.
Pension obligation leads to losses
Between June and the end of September, software revenue rose 7.5 percent, consulting 5.4 percent and infrastructure 14.8 percent. Operating income fell 1 percent to $1.7 billion but beat forecasts. The end result, however, was IBM’s huge loss of $3.2 billion. This included a pre-tax charge of $5.9 billion for the transfer of pension obligations to two insurers.
Adjusted for one-time items, earnings per share were $1.81. Analysts had forecast $1.79 on the consensus of the fact set. IBM stuck to the forecast of achieving free cash flow of about $10 billion for the full year. There is no outlook for earnings per share. The figures were welcomed by investors, with the stock initially up about 5 percent in after-hours trading.
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