IBM revenue falls as software sales mark shows decline

Last Thursday, IBM Corp missed the estimates of Wall Street for quarterly revenue after being hurt by a rare sales decline in its software unit as clients turned the other way 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 data centres and leased resources to manage and process data.

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

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

"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,” he said.

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