By Maria Armental

 

International Business Machines Corp. reported a 2.6% sales decline in the latest quarter as corporate customers put off projects and focused on cash preservation during the coronavirus pandemic.

Third-quarter profit edged up to $1.7 billion, or $1.89 a share, from $1.67 billion, or $1.87 a share. On an adjusted basis, profit was $2.58 a share.

The company, which this month laid out plans for what would be its largest business exit by spinning off a major part of its information-technology services operations, reported $17.56 billion in sales for the September quarter.

The results were roughly in line with IBM's preliminary figures, released this month when it disclosed the spinoff plans.

Analysts surveyed by FactSet expected a profit of $2.08 a share, or $2.58 a share as adjusted, on $17.54 billion in revenue.

A information technology pioneer, IBM had fallen behind the likes of Amazon.com Inc. and Microsoft Corp.

As part of the latest push to revamp business, IBM plans to separate the unit that manages clients' IT infrastructure, a business that accounts for nearly a quarter of IBM's sales but that has been shrinking as customers embrace cloud computing.

At the same time, IBM has been trying to capitalize on what it calls the hybrid cloud, which companies use to manage software and other systems across different cloud services and their own data centers.

Cloud revenue has proven to be a bright spot, with a 19% increase in the latest period.

The company, which in April withdrew financial projections citing uncertainty about the pandemic's business impact, didn't address financial projections in an earnings press release.

"The strong performance of our cloud business, led by Red Hat, underscores the growing client adoption of our open hybrid cloud platform," Chief Executive Arvind Krishna said in a statement. "Separating the managed infrastructure services business creates a market-leading standalone company and further sharpens our focus on IBM's open hybrid cloud platform and AI capabilities."

 

Write to Maria Armental at maria.armental@wsj.com

 

(END) Dow Jones Newswires

October 19, 2020 16:38 ET (20:38 GMT)

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