Title: "IBM's Revenue Falls Short of Analysts' Expectations"

International Business Machines Corp (IBM) was impacted by a slowdown in consulting demand in the third quarter, resulting in revenue figures that fell short of analyst expectations. Consequently, IBM shares dropped by as much as 8% in after-hours trading following the unsatisfactory third-quarter results.

IBM's sales in the third quarter increased by only 1%, reaching $14.97 billion, while analysts had estimated an average of $15.07 billion. Software sales grew by 9.7% to $6.5 billion, surpassing the average analyst estimate of $6.4 billion. Red Hat, acquired by IBM five years ago, saw its growth jump to 14%. Conversely, infrastructure revenue declined more sharply than expected, dropping 7% to $3.04 billion.

IBM's Chief Financial Officer, Jim Kavanaugh, noted that clients in the consulting segment were not expanding their budgets, and some generative AI projects were coming at the expense of traditional consulting services. He attributed this cautious spending to ongoing uncertainties related to economic factors such as interest rates and geopolitical tensions.

Earnings per share for the third quarter exceeded the projected $2.23, recording at $2.30. Kavanaugh also mentioned that IBM is nearing the end of its mainframe product cycle and plans to launch a new product next year.