Computing giant IBM has slashed its debt by $6.7 billion, while strong performance by new acquisition Red Hat accelerated cloud revenue growth.
The company yesterday announced its 2019 third quarter results.
IBM ended the third quarter with $11 billion of cash on hand. Debt, including global financing debt of $23.1 billion, totalled $66.3 billion – down $6.7 billion since the end of the second quarter.
“In the third quarter, as we continued to help clients with their digital reinventions, we grew revenue in our Cloud & Cognitive Software segment and in Global Business Services,” says Ginni Rometty, IBM chairman, president and chief executive officer.
“Our results demonstrate that clients see IBM and Red Hat as a powerful combination and they trust us to provide them with the open hybrid cloud technology, innovation and industry expertise to help them shift their mission-critical workloads to the cloud.”
IBM acquired Red Hat, a provider of open source solutions, in July.
“We continued our focus on the strength of our balance sheet in the third quarter,” says James Kavanaugh, IBM senior vice-president and chief financial officer.
“We generated $12.3 billion in free cash flow over the last 12 months and with our disciplined financial management, we reduced debt by nearly $7 billion in the quarter, while maintaining a strong cash balance.”
In the third quarter, the company generated net cash from operating activities of $3.6 billion, or $2.5 billion excluding global financing receivables.
IBM’s free cash flow was $1.8 billion. The company returned $1.6 billion to shareholders through $1.4 billion in dividends and $0.1 billion in gross share repurchases. The company suspended its share repurchase programme on 9 July.
According to IBM, year-to-date results reflect the impact of items related to the Red Hat acquisition.
Consolidated diluted earnings per share was $6.45 compared to $7.37, down 12% year-to-year. Consolidated net income was $5.8 billion, down 15% year-to-year.
Revenue for the nine-month period ended 30 September 2019 totalled $55.4 billion, a decrease of 4% year-to-year (down 0.7% adjusting for divested businesses and currency) compared with $57.8 billion for the first nine months of 2018.
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