(Oct 22): International Business Machines Corp (IBM) reported sales that topped analysts’ estimates, saying it had recovered most of the infrastructure deals that were delayed earlier this year.

Sales increased about 5% to US$17.1 billion (RM69.8 billion) in the quarter ended Sept 30, the company said on Wednesday in a statement. IBM’s infrastructure unit, which includes mainframe servers, expanded 4% to US$3.7 billion. Both were ahead of analysts’ average projections, according to data compiled by Bloomberg. 

About two-thirds of the mainframe and associated software deals that slipped earlier this year have since been inked, chief financial officer Jim Kavanaugh said in an interview.

In July, IBM said that customers were temporarily shifting their spending to chips and servers amid artificial intelligence (AI)-fuelled shortages, harming its mainframe and software units. This fuelled panic among investors already concerned that AI tools will disrupt many software incumbents and sent the shares down 25%, the worst day since at least 1968.

IBM’s closely watched software unit expanded 8.3% to US$7.8 billion, ahead of the US$7.64 billion anticipated by Wall Street. Big Blue has sought to refashion itself as a high-growth software company through major acquisitions of Red Hat, HashiCorp and Confluent.

For the full year, the company now expects free cash flow to increase by more than US$1 billion. Previously, it expected about US$1 billion. Profit, excluding some items, was US$2.95 a share in the third quarter, compared with the average estimate of US$2.86.

The shares gained about 5% in extended trading after closing at US$251.46 in New York. The stock declined 15% this year through Wednesday’s close.

Uploaded by Tham Yek Lee