(Reuters) – IBM, an enterprise software provider, reported lower-than-expected revenue in the second quarter due to reduced spending from businesses.
IT service companies anticipate additional challenges as companies cut back on tech budgets to reduce costs in the face of rising inflation, impacting an industry that experienced rapid growth during the pandemic.
Accenture and Tata Consultancy Services also noted weakened demand, with Accenture falling short of market estimates last month and Tata Consultancy Services experiencing its slowest revenue growth in North America in three years.
Growth in IBM’s software and consulting segments slowed compared to the previous year, as demand weakened in key U.S. and European markets.
IBM’s CFO, James Kavanaugh, explained that revenue growth in the U.S. and Western Europe was subdued due to the completion of its mainframe computer cycle launched last year.
The revenue for IBM’s mainframe computer division declined by 14.6%.
For the quarter ended June 30, total revenue fell by 0.4% to $15.48 billion, below the average estimate of $15.58 billion.
In May, IBM introduced a platform called watsonx, aimed at helping companies integrate generative AI into their products and services, following the success of chatbot ChatGPT.
Analysts anticipate that watsonx will support the software business, which grew by 7.2% to $6.6 billion during the quarter, driven by digitization projects.
Excluding items, IBM earned $2.18 per share, surpassing estimates of $2.01 per share.
(Reporting by Chavi Mehta in Bengaluru; Editing by Vinay Dwivedi)
Credit: The Star : Tech Feed
