Significant Debt Reduction for IBM in the Third Quarter

Even with 3,9% less revenue compared to the same period last year, IBM has managed to significantly reduce debt in third quarter of 2019. In just three months the company managed to reduce debt by $6,7 billion.

Total revenue in the quarter was $18 billion, 3,9% down compared with the same period in 2018. Cloud revenue was $5 billion, up 11% (14% adjusting for divested businesses and currency). Over the last twelve months, IBM managed to raise the cloud revenue to $20 billion.

“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," said Ginni Rometty, IBM chairman, president and CEO. "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.“

The company generated net cash from operating activities of $3.6 billion, or $2.5 billion excluding Global Financing receivables. Free cash flow was $1.8 billion. IBM returned $1.6 billion to shareholders through $1.4 billion in dividends and $0.1 billion in gross share repurchases. The company ended the quarter with $11.0 billion of cash on hand. Debt, including Global Financing debt of $23.1 billion, totaled $66.3 billion, down $6.7 billion since the end of the second quarter.

“We continued our focus on the strength of our balance sheet in the third quarter," said James Kavanaugh, IBM senior vice president and CFO.  "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.“

Year-to-date results reflect the impact of items related to the Red Hat acquisition closed in July. Consolidated diluted earnings per share was $6.45 compared to $7.37, down 12 percent year to year. Consolidated net income was $5.8 billion, down 15 percent year to year. Revenues for the nine-month period ended September 30, 2019 totaled $55.4 billion, a decrease of 4 percent year to year (down 0.7 percent adjusting for divested businesses and currency) compared with $57.8 billion for the first nine months of 2018. Operating (non-GAAP) diluted earnings per share from continuing operations was $8.10 compared with $8.96 for the 2018 period, a decrease of 10 percent. Operating (non-GAAP) net income for the nine months was $7.2 billion compared with $8.2 billion in the prior-year period, a decrease of 12 percent.