# IBM misses second-quarter revenue estimates as tech spending cools
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-07-20
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: IBM Misses Q2 Revenue Estimates as Tech Spending Cools
Meta Description: IBM's Q2 revenue falls short due to decline in mainframe computer sales, impacted by businesses cutting tech spending amid rising inflation and hybrid
URL: https://financedigest.com/ibm-misses-second-quarter-revenue-estimates-as-tech-spending-coolshtml

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(Reuters) – Enterprise software provider IBM’s second-quarter revenue fell short of Wall Street expectations on Wednesday, bogged down by a decline in sales of its mainframe computers as businesses cut tech spending.

IT companies have warned of more pain as businesses striving to cut costs in the face of rising inflation snip tech budgets, hurting the industry that saw rapid growth during the COVID-19 pandemic when businesses rushed to adopt hybrid work.

IT majors such as Accenture and India’s Tata Consultancy Services have also flagged demand weakness, with the former missing market estimates for quarterly revenue last month after its North America revenue grew at its slowest rate in about three years.

Revenue growth in the U.S. and Western Europe was “muted” as the company wrapped up the cycle for its mainframe computers it launched last year, Chief Financial Officer James Kavanaugh said in an interview.

IBM reported the top line of its [business that houses](https://www.financedigest.com/what-green-criteria-sustainable-finance-houses-look-for-when-conducting-due-diligence-and-how-businesses-seeking-to-attract-investment-can-get-their-house-in-order.html "What green criteria sustainable finance houses look for when conducting due diligence, and how businesses seeking to attract investment can get their house in order") the mainframe computers shrank by 14.6%.

Growth in RedHat software and consulting segment slowed likely due to a tougher IT spending environment, said Wedbush Securities analyst Moshe Katri.

Total revenue for the quarter ended June 30 fell 0.4% to $15.48 billion compared with analysts’ average estimate of $15.58 billion, according to Refinitiv data.

IBM has joined tech firms in boosting its [artificial intelligence](https://www.financedigest.com/types-of-artificial-intelligence.html "artificial intelligence") offerings, launching a platform, watsonx, in May to help companies integrate generative AI into their products and services after chatbot ChatGPT’s stellar success.

Analysts expect watsonx to aid the software business, which grew 7.2% to $6.6 billion during the reported quarter, thanks to enterprise digitization projects.

Excluding items, the company earned $2.18 per share, [beating estimates](https://www.financedigest.com/credit-agricole-beats-estimates-on-insurance-consumer-finance.html "Credit Agricole beats estimates on insurance, consumer finance") of $2.01 per share.

(Reporting by Chavi Mehta in Bengaluru; Editing by Vinay Dwivedi)


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