(Bloomberg) — After more than five years of declining sales, IBM says it will finally show investors it can grow again.
Some of that boost will come from one of the company's legacy hardware businesses, rather than the new services such as cloud and data analytics on which IBM has been pinning its prospects for growth.
Fourth-quarter revenue is projected to be $22 billion to $22.1 billion, which will represent as much as a 1.5 percent bump from the same period in 2016. It also tops analysts' average estimate of $21.8 billion. In the last quarter of the year — historically IBM's strongest — revenue will improve by as much as $2.9 billion sequentially, boosted in part by sales of its new mainframe server, Chief Financial Officer Martin Schroeter said Tuesday on a call to discuss earnings.
"The mainframe is going to drive a lot of the positive growth in the fourth quarter," said Josh Olson, an analyst at Edward Jones & Co. "When you're selling mainframes, you're also selling a lot of software and services with that." He rates the stock a hold.
If IBM achieves its outlook, it will end a 22-quarter streak of shrinking sales. During the third quarter, International Business Machines Corp. came the closest to stemming that decline since the same period in 2016. Getting back to growth on the top line has been a major goal for Chief Executive Officer Ginny Rometty and a milestone investors are looking for as proof that the company can finally
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