Unfortunately for the computer giant, IBM reported a lower earnings forecast this year in its latest quarterly report. This change is mostly due to the company acquiring Red Hat, an “American multinational software company providing open-source software products to the enterprise community,” last month.
According to CNBC, this lowering “reflects a $2.2 billion purchase-accounting adjustment” to adjust its revenue as it is valued. On top of this, they’re looking to adjust their “retention payments” and will be accounting for an “earlier-than-expected” share buyback.
As of this report, the company will be expecting at least $12.80 in profit per share for 2019. This, however, doesn’t account for some other aspects, the publication reports. It was originally predicted that the shares would hit over $13.90. Interestingly, however, shares for IBM went up right after this earnings change was reported, but this was later remedied by a 2% drop in the day trade market before closing this Friday.
IBM paid $34 million for Red Hat, which is the group’s largest highest acquisition ever. On top of this, the computer company is looking to bring in more revenue by using this acquisition to bring coded applications onto a cloud for public use. We’re unsure if they’ll be using Amazon Web Services, Microsoft’s Azure, or even their own. IBM is working on a blockchain and is fairly prevalent in the decentralized space, so it’s possible this tech will run on a blockchain network as well.
The publication reports that IBM hopes the Red Hat acquisition will bring in more earnings in a couple of years, come 2021.