IBM stock plummets, consulting sector slumps – Hashicorp acquisition overshadowed – Bloomberg

rice IBM’s stock price fell about 9% at one point in after-hours trading after regular trading on the 24th. In the results announced on the same day, investors were disappointed by weak sales in the consulting division.American software company The acquisition of Hashicorp was also announced, but it was overshadowed by the company’s financial results.

According to the announcement, sales for the January-March period (first quarter) increased by 1% to $14.5 billion (approximately 2.25 trillion yen). The company has left its previous forecast for full-year free cash flow at $12 billion.

Separately, IBM announced that it has agreed to acquire Hashicorp, which makes software for enterprise cloud business management, for an enterprise value of $6.4 billion. This is IBM’s biggest acquisition since 2019, when it acquired software company Red Hat for $31.8 billion.

The acquisition is the latest move by Chief Executive Officer Arvind Krishna, who aims to transition from a traditional hardware company to a high-growth software and services-focused company. IBM acquired software company Aptio for $4.6 billion last year. While the company is making acquisitions in these areas, it is also selling its managed infrastructure, weather and health businesses.

Investors have been focused on the possibility that IBM’s consulting division, its second-largest business, will underperform. The division’s sales for the January-March period were $5.2 billion, about the same level as the same period last year.

The Red Hat division’s sales growth rate was 9%. This was a slump for a business that had previously recorded sales growth of more than 20% each quarter.

IBM’s overall earnings per share for the January-March period excluding certain items was $1.68. Sales increased 1.5% year on year to $14.46 billion.

Original title: IBM Falls on Weak Consulting Sales, Overshadowing HashiCorp Deal, IBM Falls on Consulting Weakness, HashiCorp Deal: Street Wrap (excerpt)

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