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Bloomberg
After more than five years of declining sales, IBM says it will finally show investors it can grow again.
Some of that boost will come from one of the company’s legacy hardware businesses, rather than the new services such as cloud and data analytics on which IBM has been pinning its growth prospects.
Fourth-quarter revenue is projected to be $22 billion to $22.1 billion, which will represent as much as a 1.5 percent bump from the same period in 2016. It also tops analysts’ average estimate of $21.8 billion. In the last quarter of the year, historically IBM’s strongest, revenue will improve by as much as $2.9 billion sequentially, boosted in part by sales of its new mainframe server, Chief Financial Officer Martin Schroeter said.
“The mainframe is going to drive a lot of the positive growth in the fourth quarter,†said Josh Olson, an analyst at Edward Jones & Co. “When you’re selling mainframes, you’re also selling a lot of software and services with that.†He rates the stock a hold.
If IBM achieves its outlook, it will end a 22-quarter streak of shrinking sales.
But the mainframe business is cyclical, and analysts aren’t convinced that IBM can sustain growth after server sales start tapering off.