IBM: shares slide as Red Hat's growth slows

(CercleFinance.com) - IBM shares retreated sharply on Tuesday after signs of a slowdown in revenue growth at its software-and-services unit Red Hat, as well as in its cloud and cognitive businesses.


Revenue for the Armonk, New York-based firm fell 3.4% to 17.4 billion dollars in the first quarter, below the consensus of 17.6 billion dollars.

IBM's first-quarter net profit fell 18% to 1.6 billion dollars, or 1.84 dollar per share, while analysts on average expected earnings of 1.79 dollar per share.

Analysts at Wedbush Securities noted quarter-to-quarter revenue growth deceleration for Red Hat - whose revenue still rose by a solid 18% in the past quarter, as well as for the group's cloud and cognitive software division, where revenue rose 5%.

"We also continue to struggle with the logic underlying Red Hat's 34 billion dollar price tag," Wedbush said.

The stock, which has fallen by 10% year-to-date, fell a further 4.6% on Tuesday morning.

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