US business machines conglomerate has been a rare pocket of stability in tech market meltdown, gaining 3.3% this yearInternational Business Machines’s shares fell about 6% in early trading on Tuesday after the tech company lowered its forecasts for free cash flow this year due to dollar strength and the loss of business in Russia.
The reduced free cash flow range isn’t a result of a broader business slowdown, CFO Jim Kavanaugh said in an interview. “Our demand remains solid,” he said. CEO Arvind Krishna’s goal has been to pivot Big Blue from its traditional business of infrastructure and information-technology services to the fast-growing cloud-computing market. Acquisitions have been a big part of the strategy, with IBM buying more than 25 companies under Krishna’s tenure, largely focused on bolstering the company’s hybrid-cloud offerings.
Red Hat sales rose 12%, the slowest rate since it was acquired in 2019. The division has been a key part of Krishna’s turnaround strategy and typically posts growth closer to 20%. Last week, IBM named Matt Hicks as the new head of the segment, promising little change in strategy. IBM spun off a large portion of its legacy infrastructure services unit into a new company called Kyndryl Holdings in November. Sales to Kyndryl continue to make up a significant portion of IBM’s revenue.
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