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IBM’s Hardware Segment Is Far from Reporting Revenue Growth

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Nov. 20 2020, Updated 5:15 p.m. ET

Hardware segment revenues fall year-over-year in 3Q15

In the prior part of this series, we discussed IBM’s (IBM) performance in fiscal 3Q15. Now let’s discuss IBM’s Hardware segment, which was the worst-hit operating segment in fiscal 3Q15, registering a revenue fall of 39% on a year-over-year (or YoY) basis to $1.5 billion.

Revenue from z Systems and Power Systems grew by 20% and 2%, respectively, in 3Q15 in constant currency terms. We’ll discuss these in detail in a later part of this series.

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IBM seeks to threaten x86 server dominance

IBM’s divestment of Intel-based (INTC) x86 servers to Lenovo (LNVGY) and microelectronics within the Hardware segment continued to impact the Hardware segment’s growth in 3Q15.

Through its launch of SuperVessel and OpenStack, IBM aims to threaten x86 server dominance. Developed by IBM Research China and the IBM Systems Technology lab, SuperVessel is built on POWER 7 or POWER 8 processors and OpenStack.

Being a free OpenStack-based cloud service, SuperVessel enables application development on IBM’s OpenPOWER hardware platform.

Divestment of IBM’s semiconductor operations to GlobalFoundries involved a deal wherein IBM will pay GlobalFoundries $1.5 billion in cash over the next three years to take chip operations off its books. The deal happened in IBM’s fiscal 3Q14.

IBM’s association with Samsung (SSNLF) and GlobalFoundries led to the production of the world’s smallest chip at 7 nanometers.

You can consider investing in the SPDR S&P 500 ETF (SPY) to gain exposure to the technology sector. The ETF invests about 18% of its holdings in the technology sector.

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