The Big Blue (NYSE: IBM) recently reported its third-quarter results that failed to impress the market. The company is looking toward acquisitions and partnerships to drive its services segment.
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IBM’s Financials
Revenues for the third quarter grew 0.3% $17.6 billion, falling short of the Street’s estimates by 0.8%. Adjusted earnings of $2.52 a share were marginally ahead of the $2.51 that the market predicted.
By segment, revenues from Cloud & Cognitive Software that includes Cloud & Data Platforms such as Red Hat, Cognitive Applications, and Transaction Processing Platforms grew 2% over the year to $5.7 billion. Within the segment, Cloud & Data Platforms grew 9%.
Revenues from Global Business Services (GBS), which includes Consulting, Application Management, and Global Process Services, grew 11% to $4.4 billion. Revenues from Global Technology Services (GTS), which includes Infrastructure & Cloud Services and Technology Support Services, fell 5.4% to $6.2 billion. Revenues from its Systems segment including Systems Hardware and Operating Systems Software, fell 12.4% to $1.1 billion, and Global Financing revenues fell 19.8% to $220 million.
IBM did not provide any outlook.
IBM’s Acquisitions
IBM recently announced plans to acquire the Adobe Workfront consulting unit and assets from Rego Consulting Corporation. The acquisition will allow IBM to expand its Adobe service offering to meet the rising client demand for experience-led business transformation backed by intelligent workflows. Employees are now able to work faster and smarter with improved visibility, speed, and quality regardless of the challenges. Adobe Workfront breaks down siloes and speeds up digital work, while also improving efficiency, quality, and control of the entire work management lifecycle.
Rego has been recognized as the Adobe Workfront Partner of the year for the past two years and has achieved Adobe Workfront Specialization. The Rego team that is being acquired by IBM has experience and expertise in end-to-end Workfront services and has delivered strategy formulation, implementation, management, and support to Fortune 500 companies. IBM will integrate Rego with its growing Adobe practice within IBM iX, the customer and experience transformation group of IBM Consulting. IBM and Adobe already have a strategic partnership that has been existing for more than 20 years. This acquisition will help IBM gain even deeper marketing domain expertise and consulting capabilities in the fast-growing work management space. Terms of the acquisition were not disclosed.
Additionally, IBM also announced a partnership with Apptio that will help clients improve their hybrid cloud technology decision-making and drive the adoption of Red Hat OpenShift and its own hybrid cloud approach. As part of the collaboration, both companies will offer their clients visibility, optimization, and migration capabilities for IBM Cloud with Red Hat OpenShift through Apptio’s financial decision engine, which cuts across enterprise technology.
IBM’s stock is currently trading at $128.33 with a market capitalization of $114.62 billion. It touched a 52-week high of $152.84 in June this year. In October last year, IBM touched a 52-week low of $105.92.
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