IBM’s focus shifts back to legacy revenue as Red Hat settles in

The world’s leading provider of open source cloud software,Red Hat which was acquired for about $34 billion by IBM, has released its short-term stock performance; served as a focus of the company’s last earnings.The short-term stock performance of a company will depend on the company’s global technology services business, and the firm has shown higher growth percentage in this aspect.

Red Hat in partnership with IBM has shown+1.15% growths and is scheduled to report third-quarter earnings. This time around IBM is going to have to show a turnaround in some of its legacy businesses that still make up a big part of sales, like Global Technology Services.

“While most of the attention has shifted to Red Hat, our model does not assume a material contribution from revenue synergies, rather, we believe near-term growth and stock performance will hinge on IBM’s ability to improve the fundamental performance of the legacy core, primarily GTS (~35% of revenue),”stated Stifel analyst David Grossman.

It is reported that IBM on average is expected to post adjusted earnings of $2.67 a share, down from the $3.54 a share expected at the beginning of the quarter and there is an increase in both cloud software and cognitive services shares after the acquisition of Red Hat.