IBM provided for Other Sales Slide Despite Red Hat Deal: What to Watch t

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IBM CEO Ginni Rometty in San Francisco on 3 October.

Photo:

News Michael Short / Bloomberg

International Business Machines Corp.

IBM 0.68%

it is expected to report third quarter earnings after the market has closed on Wednesday. The results, which follow a series of quarterly revenue cuts, are the first company since it closed to purchase of $ 34 billion of Red Hat's open source window. Seeking this:

INTRODUCTION: t IBM is expected to report adjusted earnings per share of $ 2.67, down from $ 3.42 in the previous year, according to surveyed FactSet analysts. Net income should be around $ 2.41 billion, about 10% lower than a year earlier, according to the expectations of analysts.

REVENUE ENFORCEMENT: t IBM plans to report sales of $ 18.22 billion, according to the expectations of analysts, down 2.8% from a year earlier. That is the fifth direct quarterly revenue reduction by the company.

WHAT TO DO:

RED HAT EFFECT: IBM completed its biggest ever acquisition in July, setting up a company based at N.C. Red Hat-a Raleigh. With the deal closed now, investors are looking for early signs of how the mix is ​​going on, even if there is a near-term impact of income-related deferral dealing and stock adjustments drawing on IBM's profit. In August, IBM shortly earned a share for the full year to $ 12.80 or more from an earlier projection of at least $ 13.90.

READY: IBM has long been an investor-centered approach to cloud computing, where companies hire computer power rather than use their own machines. Investors would like to know how this strategy is playing out after the company has reported that annual cloud income rose by 5% in the second quarter. This is slower growth

Amazon.com Inc.,

are leading in the cloud, market and

Microsoft Corp.

IBM has also not reached its own aspirations for the growth in the percentage-growth growth rates of that Chief Financial Officer.

James Kavanaugh

discussed in April.

REVIEW OF ACTIVITY: Sales of the latest generations of IBM mainframe computers are increasing. In the second quarter, revenue in the division including key frames from a previous year decreased by almost 20% as the computers it introduced in 2017 lost some of its sales momentum. The focus now is on the other income that key frames could have, as well as the spread of the next generation of IBM's main frames, which the company introduced in September. He has not yet started selling them.

Write Asa Fitch at asa.fitch@wsj.com

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