IBM promises that its profits will grow from the beginning of next year as a result of the acquisition of open source software giant Red Hat. In the short term, however, Big Blue expects a decrease in turnover.
IBM expects sales in this quarter to be 1.3 billion to 1.4 billion U.S. dollars lower than in the second quarter, writes The Wall Street Journal. This does not include the impact of Red Hat. According to Big Blue, the decline is due to seasonal fluctuations and lost revenues of companies that sold it.
Red Hat is expected to add as much as $350 million to its revenue in the current quarter. However, despite these additional sales, it is likely that this will be the fifth consecutive quarter with decreases in sales.
Next year will be better
Big Blue also expects its operational income per share for this year to be lower. For the deal with Red Hat, this was expected to be $13.90 per share. That amount is now $12.80 per share. According to CFO James Kavanaugh, this has to do with accounting adjustments for sales from Red Hat.
IBM CEO Ginni Rometty promises to get better next year. Then the combination of Big Blue and Red Hat should ensure that the company enters a sustainable growth path, with larger margins and more income. The company expects sales growth of 5 percent for next year.
IBM and Red Hat
The deal between IBM and Red Hat, worth 34 billion dollars, was completed in July this year. Since then, Big Blue has been looking forward to a renewed hybrid and multi-cloud strategy based on Red Hat technology and IBM solutions.
Big Blue is launching a new hybrid multi-cloud platform based on Red Hat OpenShift and Red Hat Enterprise Linux (RHEL) technology, says Dennis Lauwers, Distinguished Engineer Hybrid Cloud Europe at IBM, early this month. The new platform allows customers to run workloads wherever they want, and manage them centrally from a single management console.
This makes it possible, for example, to run the entire infrastructure in AWS and Azure using the IBM solution. The platform is available as a SaaS solution called Red Hat OpenShift on IBM Cloud, or as a container to roll out in a desired environment.
This news article was automatically translated from Dutch to give Techzine.eu a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.
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