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INTERNATIONAL BUSINESS MACHINES CORPORATION

(IBM)
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International Business Machines : IBM Hopes to Double Sales at Red Hat in Next Three Years

10/20/2020 | 01:13pm EDT

By Asa Fitch

International Business Machines Corp. hopes to double sales at its Red Hat open-source software unit in the next three years as Chief Executive Arvind Krishna aims to restore growth at the tech titan.

Red Hat has been enjoying annualized growth of above 15% in recent quarters, Mr. Krishna said at the WSJ Tech Live conference, putting it on a trajectory to achieve a target of doubling revenue from the more than $3 billion it had when IBM made the acquisition, the biggest in its history. IBM paid around $33 billion with a large premium to acquire the company, and the growth will show it was a valuable deal.

IBM in recent years has struggled as some of its historic IT services business contracted and customers flocked to cloud-computing where rivals such as Amazon.com Inc. and Microsoft Corp. have led. IBM reported declining revenue in 30 quarters over the last 10 years, and its stock price has fallen sharply, even though its sales remain gigantic, at over $75 billion a year.

Mr. Krishna has been trying to bolster growth through a greater focus on cloud-computing. He said IBM was working to boost its topline over the coming months and to achieve mid-single-digit percentage sales increases by mid-2022.

IBM recently said it plans to spin off its managed IT infrastructure arm representing about a quarter of its employees and revenues. The spinoff plan, unveiled Oct. 8, was the company's first major reshuffling under Mr. Krishna, who took the top post in April.

Mr. Krishna said Tuesday it was more important for a company to be growing than large.

Write to Asa Fitch at asa.fitch@wsj.com

(END) Dow Jones Newswires

10-20-20 1312ET

Stocks mentioned in the article
ChangeLast1st jan.
INTERNATIONAL BUSINESS MACHINES CORPORATION -0.83% 150.03 Delayed Quote.19.18%
MICROSOFT CORPORATION 0.78% 259.89 Delayed Quote.15.95%
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Financials (USD)
Sales 2021 74 392 M - -
Net income 2021 7 505 M - -
Net Debt 2021 48 935 M - -
P/E ratio 2021 17,9x
Yield 2021 4,47%
Capitalization 134 B 134 B -
EV / Sales 2021 2,46x
EV / Sales 2022 2,36x
Nbr of Employees 345 900
Free-Float 39,8%
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Technical analysis trends INTERNATIONAL BUSINESS MACHINES CORPORATION
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Income Statement Evolution
Consensus
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Mean consensus HOLD
Number of Analysts 17
Average target price 143,32 $
Last Close Price 150,03 $
Spread / Highest target 16,6%
Spread / Average Target -4,47%
Spread / Lowest Target -19,3%
EPS Revisions
Managers and Directors
NameTitle
Arvind Krishna Chairman & Chief Executive Officer
James M. Whitehurst President, Head-Strategy, Cloud & Cognitive
James J. Kavanaugh Chief Financial Officer & Senior VP-Operations
Juan Antonio Zufiria Senior VP-Global Technology Services
Kathryn W. Guarini Chief Information Officer
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