IBM Hopes to Double Sales at Red Hat in Next Three Years

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 [e-mail]

(END) Dow Jones Newswires

October 20, 2020 13:12 ET (17:12 GMT)

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