IBM Hopes to Double Sales at Red Hat in Next Three Years
21 October 2020 - 4:27AM
Dow Jones News
By Asa Fitch
International Business Machines Corp. hopes to double sales at
its Red Hat open-source software unit in the next three years as
Chief Executive Arvind Krishna aims to restore growth at the tech
titan.
Red Hat has been enjoying annualized growth of above 15% in
recent quarters, Mr. Krishna said at the WSJ Tech Live conference,
putting it on a trajectory to achieve a target of doubling revenue
from the more than $3 billion it had when IBM made the acquisition,
the biggest in its history. IBM paid around $33 billion with a
large premium to acquire the company, and the growth will show it
was a valuable deal.
IBM in recent years has struggled as some of its historic IT
services business contracted and customers flocked to
cloud-computing where rivals such as Amazon.com Inc. and Microsoft
Corp. have led. IBM reported declining revenue in 30 quarters over
the last 10 years, and its stock price has fallen sharply, even
though its sales remain gigantic, at over $75 billion a year.
Mr. Krishna has been trying to bolster growth through a greater
focus on cloud-computing. He said IBM was working to boost its
topline over the coming months and to achieve mid-single-digit
percentage sales increases by mid-2022.
IBM recently said it plans to spin off its managed IT
infrastructure arm representing about a quarter of its employees
and revenues. The spinoff plan, unveiled Oct. 8, was the company's
first major reshuffling under Mr. Krishna, who took the top post in
April.
Mr. Krishna said Tuesday it was more important for a company to
be growing than large.
Write to Asa Fitch at asa.fitch@wsj.com
(END) Dow Jones Newswires
October 20, 2020 13:12 ET (17:12 GMT)
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