Corona consequences: IBM shares buckle: IBM cancels after sales and profit slump forecast message

—“In March, our software transactions came to a standstill almost overnight,” said chief financial officer of US computer giant IBM, James Kavanaugh, about the business in the first quarter. The reason for this is that, for IBM customers, the most urgent problems in the crisis were at the forefront. At the same time, IBM has hopes that it will be able to benefit in the longer term if, as a result, companies rely more heavily on cloud services and artificial intelligence.

The computer veteran was the first technology company to present its current quarterly figures after the US exchange closed on Monday. The results only partially reflect the current situation because the business was not affected by the corona virus in the first few weeks. Nevertheless, IBM reported significant business growth and canceled the annual forecast.

In the three months to the end of March, revenue fell 3.4 percent year-over-year to $ 17.6 billion (€ 16.2 billion). Profits fell a good quarter to $ 1.2 billion.

IBM has long been weak in the traditional hardware core business with servers and green computers, but at least posted strong growth in the cloud division with IT services on the Internet. The previous manager, Arvind Krishna, had recently taken over from Ginni Rometty. In her tenure since 2012, she had tried to reorganize IBM through a profound corporate change to new business areas such as cloud services, data analysis and artificial intelligence. So far, however, success has been limited, quarters with business growth have been rare for years.

Krishna was now trying to calm investors down. IBM has long-term contracts with large customers, so stable earnings are still guaranteed, he emphasized. At the same time, the crisis had shown companies that they needed to modernize their business more resolutely – and here IBM wanted to be available with expertise in artificial intelligence.

With more homework, the demand for cloud services will also increase, Krishna cited another example. IBM bought Linux specialist Red Hat in 2018 for more than $ 30 billion to strengthen itself in this area. However, this also drove the debt high: IBM recently stood at more than $ 60 billion in chalk, while the cash reserves were at $ 12 billion. The company will continue to divest businesses to raise its profile, Krishna announced.

Investors dropped IBM’s NYSE stock price by 3.3 percent on Tuesday to $ 116.76.

/ so / hbr / DP / stw

ARMONK (dpa-AFX)