IBM Cuts Revenue Forecast as Mainframe Sales Plunge 42%

International Business Machines Corp. (IBM) cut its full-year revenue forecast to 4–5% growth from the prior 5%+ after reporting a sharp 42% decline in mainframe sales in the second quarter. The company posted a net profit of $2.165 billion for Q2, down 1% year-over-year, while first-half net profit rose 4% to $3.381 billion Source: infobae.

Revenue and Profit

Total Q2 revenue rose about 1% to $17.2 billion, in line with preliminary results. The software segment grew 5% to $7.8 billion, while consulting edged up 1% to $5.3 billion. Infrastructure revenue fell 7% to $3.8 billion, dragged down by mainframes Source: larepublicaco Source: infobae.

Mainframe Woes

The company attributed the forecast cut to a 42% collapse in revenue from its Z-series mainframe business, which had boosted growth in prior quarters. CFO Jim Kavanaugh said the rest of IBM is performing well Source: larepublicaco.

Software and AI

Despite the setback, IBM's software portfolio—bolstered by acquisitions like Red Hat and HashiCorp—remained strong. Data software grew 19%, and hybrid cloud 11%. CEO Arvind Krishna said IBM is positioned for an "AI-driven future" and plans to boost cost savings and free cash flow by $1 billion Source: larepublicaco Source: infobae.

Shares rose about 3% in after-hours trading after closing at $205.77, but are down 31% year-to-date Source: larepublicaco.