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IBM Third-Quarter Earnings Hit with Hardware Weakness

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International Business Machines Corp. (NYSE:IBM) reported terrible third quarter earnings especially from Chinese operations. Revenue dropped 4 percent to $23.7 billion; analysts were expecting $24.74 billion in revenue for the third quarter. Sales in China were down 22 percent because of significant slowdowns in the hardware business. The hardware business accounts for 40 percent of operations in China. The Chinese government is developing an economic plan to drive more hardware business to domestic companies in the wake of the NSA spying scandal. According to Bloomberg, for the first nine months of this year hardware revenue across the board was down $713 million. In the wake of those concerns, the company is moving more towards cloud base business, which is up 70 percent in the current year. Software side of the business is also doing well. For the quarter, software sales were up 1 percent.