International Business Machines (IBM)

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1Q Earnings

International Business Machines (IBM) dropped about 9 per cent in extended trading after the company’s weak consulting unit sales disappointed investors, overshadowing its acquisition of software firm HashiCorp.

First-quarter sales gained 1 per cent to US$14.5 billion, the Armonk, New York-based company said on Wednesday (Apr 24).

IBM also reiterated its previous outlook of US$12 billion in free cash flow for the fiscal year ending in December.

Separately, IBM announced it has agreed to buy HashiCorp, which sells software that helps companies manage their cloud-computing operations, for an enterprise value of US$6.4 billion.

The acquisition is IBM’s largest since buying software firm Red Hat in 2019 for US$31.8 billion.

The deal is another move by chief executive officer Arvind Krishna to turn the legacy tech hardware company into one focused on high-growth software and services.

Big Blue has made other acquisitions in this area, such as Apptio for US$4.6 billion last year, and divested managed infrastructure, weather and health businesses.

Source: Phillips