Despite a strong dollar, business at technology giant IBM is solid. Sales increase in the summer. Due to a one-off effect, however, the third quarter ended with a loss in the billions.
The US group IBM slipped deep into the red in the summer due to special charges. At the same time, the US company reported robust day-to-day business. Revenue rose 6 percent year-over-year in the third quarter to $14.1 billion. According to the information, the reason was primarily higher demand in the software, consulting and infrastructure segments. The management of the IT group was more confident about sales for the year as a whole.
CEO Arvind Krishna now sees sales "above our model", which envisages growth in the mid-single-digit percentage range. In July, he still saw sales "at the upper 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 robust demand for cloud software and IT services despite global inflation and economic concerns.
Between June and the end of September, software revenues climbed 7.5 percent, consulting 5.4 percent and infrastructure 14.8 percent. Operating profit fell 1 percent to $1.7 billion, but beat forecasts. The bottom line, however, was IBM's massive loss of $3.2 billion. This included a $5.9 billion pretax charge from the transfer of pension obligations to two insurers.
Adjusted for one-time items, earnings per share were $1.81. Analysts had forecast $1.79 in the factset consensus. IBM stuck to the forecast of achieving free cash flow of around ten billion dollars for the full year. There is no outlook for earnings per share. The figures were well received by investors, and the share initially rose by around five percent in after-hours trading.
