IBM drops after reporting that revenue in its hybrid cloud division grew 14%, slower than expected
After sliding last night, IBM shares have continued their slump into the morning too, down about 7% in premarket trading at the time of writing. This follows a disappointing Q3 revenues report across two of the most keenly watched areas in its software business.
Despite a small headline beat on the top line, investors have since honed in on the fact that revenues in its hybrid cloud unit — home to Red Hat, the enterprise software provider IBM acquired for $34 billion in 2019 — grew 14%, slower than the previous period and below analysts’ estimates of 16%, per Bloomberg. Meanwhile, transaction processing software sales dropped 1% in the third quarter, compounding investors’ worries about IBM’s growth moving forward, per analysts.
Though overall software revenues climbed 10% to $7.2 billion across the quarter (in line with expectations), traders seem unwilling to look past the Red Hat and transaction processing results.
Despite a small headline beat on the top line, investors have since honed in on the fact that revenues in its hybrid cloud unit — home to Red Hat, the enterprise software provider IBM acquired for $34 billion in 2019 — grew 14%, slower than the previous period and below analysts’ estimates of 16%, per Bloomberg. Meanwhile, transaction processing software sales dropped 1% in the third quarter, compounding investors’ worries about IBM’s growth moving forward, per analysts.
Though overall software revenues climbed 10% to $7.2 billion across the quarter (in line with expectations), traders seem unwilling to look past the Red Hat and transaction processing results.
