IBM’s Q3 solid with strength in Red Hat, hybrid cloud

October 19, 2020

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IBM reported third quarter results in line with the expectations outlined when it announced plans to spin off its managed infrastructure services unit. The company saw strength in its Red Hat unit.

The company reported non-GAAP third quarter earnings of $2.58 a share on revenue of $17.6 billion. Wall Street was expecting IBM to report third quarter revenue of $17.54 billion with non-GAAP earnings of $2.58 a share. Net earnings per share from continuing operations were $1.89. IBM’s third quarter revenue was down 2.65% and down 3.1% adjusting for divested businesses adn currency.

The results come shortly after announcing a strategy that will increase its focus on its hybrid cloud business. That move, part of CEO Arvind Krishna’s plan to focus on higher-margin businesses like AI and cloud, overshadowed IBM’s quarter.

By division for the third quarter:

The cloud and cognitive software unit, which includes Red Hat, cognitive applications and transaction processing platforms, had revenue of $5.6 billion, up 7%. Cloud and data platforms revenue was up 20% led by Red Hat. Cognitive applications were up 1% and cloud sales were up more than 60%.
Global business services, which includes consulting, application management and global process services, had revenue of $4 billion, down 5%.
Global technology services had revenue of $6.5 billion, down 4%.
Systems revenue was $1.3 billion, down 15%, due to declines in IBM Z and storage systems.