Can Red Hat give IBM another boost in earnings? We’ll find out soon

RALEIGH – IBM is scheduled to announced its latest quarterly earnings today after the markets close and a big question to be answered is: Will Raleigh-based Red Hat deliver another bottom-line boost even in the times of the COVID-19 crisis?

Last quarter – which occurred as IBM (NYSE: IBM) was closing on the $34 billion acquistion of Red Hat – the Hatters’ sales helped since its own sales surged 24 percent and cloud sales climbed 21 percent.

Wall Street financial firm Zacks Research notes that new CEO Arvind Krishna – he took over April 6 – is putting more emphasis on cloud as well as emerging tech sectors such as artificial intelligence and quantum computing. (IBM works closely with NC State on quantum research.)

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“Last quarter, IBM surprised Wall Street with Q4 revenue growth, after five straight periods of declining sales. More specifically, Red Hat revenue jumped 24%, with total cloud revenue up 21%. Despite this solid expansion from vital growth units, IBM’s overall quarterly sales only climbed 0.1%,” Zacks reports.

And the coronavirus could hurt sales since it emerged as a pandemic.

“Our Zacks estimates call for IBM’s Q1 sales to slip 1.2% from the year-ago period to $17.97 billion,” Zacks says.

“Meanwhile, its adjusted quarterly earnings are projected to fall by 24.4% to hit $1.70 a share. Peeking ahead, IBM’s adjusted fiscal 2020 EPS figure is expected to slip 4.8%, on 2.6% lower revenue.

“On top of that, the historic tech giant’s consensus Q1 earnings estimate has slipped nearly 13% in the last 60 days.”

IBM employs thousands of people across North Carolina, including Red Hat and one of Big Blue’s largest corporate campuses in RTP.