IBM's Q1 shortcomings put pressure on Big Blue to seek Cloud, Red Hat for an increase



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IBM's first quarter results are there, and it's not the elevator that Big Blue expected.

The company said in a statement revenue of $ 18.2 billion – a decrease of almost 5% over the same quarter last year. It is also much less than the $ 18.46 billion expected by analysts, according to Refinitiv.

It marks the third consecutive quarter of revenue decline year after year.

Immediately after the news, IBM shares fell as much as 4 percent late Tuesday afternoon.

Among other highlights:

  • IBM's Global Technology Services segment generated revenue of $ 6.88 billion, down 7 percent from a year earlier.
  • The Cloud & Cognitive Software segment – which contains cognitive applications, cloud and data platforms, and transaction processing platforms – reached $ 5.04 billion in revenue, down 1.5%.
  • The Global Business Services business segment had revenues of US $ 4.12 billion, basically stable. System revenue was $ 1.33 billion, down 11 percent.

Despite the shortcomings, IBM CEO Ginni Rometty gave a positive spin on results.

"In the first quarter, our cloud revenue growth accelerated and we once again grew in key, high value areas in Cloud and Cognitive Software and consulting," she said in a statement. "IBM's investments in innovative technologies coupled with our industry expertise and our commitment to trust and security position us well to help customers move to chapter two of their digital reinvention."

By the end of this year, IBM is expected to close a $ 34 billion deal to acquire Red Hat. Many analysts believe the acquisition could be the boost IBM needs.

"IBM is gaining new customers, even cloud-naïve, before RHT," Nomura Instinet analysts, led by Jeffrey Kvaal, wrote in a note distributed to customers on April 9, as reported by CNBC. "OpenShift [a Red Hat product] should help IBM win new customers and new workloads as companies begin to roll out mission-critical applications from the site to public or private clouds. "

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