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RED HAT

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

IBM’s focus shifts back to legacy revenue as Red Hat settles in
The Siliconreview
14 October, 2019

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.