U.S. technology company IBM has lowered its annual revenue forecast due to sluggish performance in its core business and increased investments in artificial intelligence (AI) infrastructure by corporations.
On July 22, IBM announced in its second-quarter earnings report that it has revised its revenue growth forecast for the year, excluding the effects of currency fluctuations, from 'over 5%' to between 4% and 5%.
Second-quarter revenue reached $17.162 billion, a 1% increase from the same period last year, but fell short of market expectations of $17.58 billion.
Net income was $2.165 billion, slightly down from $2.194 billion a year earlier. Adjusted earnings per share (EPS), excluding one-time items, also came in at $2.93, below the market forecast of $2.97.
The decline in sales from IBM's mainframe business significantly impacted its performance. Revenue from IBM Z mainframes dropped 42% year-over-year, and overall infrastructure revenue decreased by 7%. While software revenue increased by 5%, it did not meet market expectations.
Corporations have concentrated their investments in servers, data storage, and memory needed for AI, leading to delays in some existing information technology (IT) investments. Consequently, some large contracts that IBM anticipated were not finalized in the second quarter. IBM acknowledged that it failed to respond quickly to the rapidly changing market conditions.
However, Arvind Krishna, IBM's CEO, stated during a conference call following the earnings announcement that about one-third of the large contracts that did not materialize in the second quarter have already been secured in the third quarter.
* This article has been translated by AI.
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