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IBM’s revenue miss on weakness in its largest unit, shares drop 5%

(Reuters) – International Business Machines Corp’s (IBM.(N) missed Wall Street’s estimates for quarterly revenue on Wednesday, as the global technology services unit was affected by the weakness in some European markets, sending its shares down 5 percent in extended trading.

FILE PHOTO: A man stands in the vicinity of an IBM logo at the Mobile World Congress in Barcelona, Spain, February 25, 2019 at the latest. REUTERS/Sergio Perez/Photo File

For example, IBM, which wrapped up its acquisition of a maker of Linux-Red Hat, Inc. earlier this year, in the face of years of revenue decline, in the midst of the shift to the cloud, from its traditional businesses, including the mainframe and communicate with each other.

Revenue from global technology services, IBM’s largest unit, which is responsible for some of the world’s largest data centers, these are the primary client’s business volumes, particularly in the united kingdom, and Germany, the company’s Chief Financial Officer, and James Kavanaugh said at a post-transcription.

After an up and down cycle, it is expected that the company’s mainframe business in order to return to a normal product cycle, during the fourth quarter, Kavanaugh told Reuters.

Sales of IBM’s cloud services rose by 11% to reach $5 billion, helping the company beat profit expectations for the third quarter of the year.

In total, sales decreased by 3.9% to $18.03 billion, missing analysts ‘ average estimate of $18.22 billion, according to IBES data, Refinitiv. Excluding the impact of currency and business disposals, sales fell by 0.6%.

IBM’s global technology services unit reported a 5.6% drop in revenue, to $6.70 billion.

THE CLOUD IN FOCUS

Chief Executive Officer Ginni Rometty, who has been with IBM for more than seven years, is betting on a subscription-based software offerings, the Red Hat deal, which is the company’s largest acquisition to date.

However, APPLE has said that the report is a part of Red Hat’s actual revenue for a few quarters, while the inclusion of all of its costs, as required by U.S. accounting standards.

In the cloud, as well as cognitive unit of software, which includes Red Hat, which reported a 6.4% rise in revenues, to $5.28 billion for the third quarter ended Sept. 30.

Net income fell to $1.67 billion, or $1.87 per diluted share, from $2.69 billion, or $2.94 per diluted share, a year earlier.

Excluding special items, the company earned $2.68 per diluted share, 1 cent above the analysts ‘ estimate.

The Dow component’s shares, which have gained about 25% this year, a decrease of 5.4%, at $134.44, in extended trading.

Reporting Munsif Vengattil in Bengaluru; Editing by Maju Samuel

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