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International Business Machines Corporation or IBM for short has been dealing with disappointing numbers for the last five years. However, the latest fiscal quarter report proved investors that the organization still holds a lot of value to them. Therefore, the company announced greater sales expectations for the last quarter of the year.
As of lately, IBM redirected all its efforts towards modern services such as cloud and data analytics. However, the expected boost in sales is slated to come from one of its legacy hardware projects.
IBM Had the Luxury to Set Higher Sales Expectations for the Fourth Quarter of the Year
The fourth-quarter revenue is expected to extend to somewhere between $22 billion to $22.1 billion. This projection marks a 1.5% boost by comparison to same period last year’s income. The target is also defying analysts’ average estimates of $21.8 million.
The report on third-quarter performance improved confidence in the last three months of the year. Sales expectations will be topped thanks to IBM’s new mainframe server. On Tuesday, Chief Financial Officer Martin Schroeter claimed that the last quarter of the year is going to receive waves of revenue boost that can come to an addition of $2.9 billion.
If IBM manages to deliver this target revenue, the company will end a 22-quarter streak of low sales. Chief Executive Officer Ginny Rometty has been working towards growth since the beginning. The performance of this year’s third quarter is the proof investors have been waiting for to confirm that the company has the capacity to recover from its five-year decline.
On the other hand, analysts know that the mainframe business does not provide long-term effects. Therefore, the latest positive numbers might signal just a temporary improvement. IBM has to develop other projects such as cloud software and services to be able to sustain constant growth.
The third quarter recorded $19.5 billion which is only 1% below the performance attained one year ago. Nonetheless, this number beat analysts’ estimations of $18.6 billion. Most of the sales came from hardware department, yet the software products didn’t underperform either. Cognitive solutions which include innovative products such as Watson analytics grew 3.9%. In the end, late trading increased shares by 5.3% to $154.33.
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