Aurelia Butler

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(Reuters) -International Business Machines will buy HashiCorp (NASDAQ:HCP) in a deal valued at $6.4 billion, the company said on Wednesday, expanding its cloud-based software products to tap into an AI-powered boom in demand.Software has been a bright spot for IBM (NYSE:IBM) as its consulting business grapples with more cautious spending by enterprises navigating higher interest rates. IBM will pay $35 per share for HashiCorp, a 42.6% premium to Monday’s closing price. HashiCorp’s shares had surged on Tuesday following media reports of the deal talks. HashiCorp’s shares rose more than 4% in extended trading on Wednesday while IBM fell 7% as the company separately reported first-quarter revenue marginally below estimates.Total revenue of $14.46 billion compared with LSEG estimates of $14.55 billion. Consulting segment sales were flat in the quarter.”You’re seeing clients in this uncertain macroeconomic environment. You’re seeing clients that are tightening discretionary spending,” CFO Jim Kavanaugh told Reuters. Accenture (NYSE:ACN) had cut its fiscal-year 2024 revenue forecast in March as clients curbed spending on its consulting services.IBM’s software business grew 5.5% in the first quarter. The company has doubled down on its cloud business as it becomes increasingly necessary to store and process the vast amounts of data employed in artificial intelligence programs. The Big Blue’s “AI book of business” crossed $1 billion in the first quarter, growing sequentially. The book comprises actual sales and bookings from various offerings.IBM said the HashiCorp acquisition would be funded by cash on hand and would add to adjusted core profit within the first full year of closing, expected by the end of 2024.California-based HashiCorp allows customers to establish and manage their infrastructures on the cloud.”This is a smart deal for IBM. They’re buying a leader and it complements their existing portfolio,” Stephen Elliot, a vice president at market research firm International Data Corp, said.IBM reported adjusted earnings of $1.68 per share for the quarter ended March, compared to analysts’ average estimate of $1.60. More

The company posted an adjusted earnings per share (EPS) of $0.45, falling short of analysts’ expectations of $0.64. Revenue for the quarter was $1.42 billion, also below the consensus estimate of $1.45 billion.In comparison to the same quarter last year, total revenue decreased by 1%, with the Title Insurance and Services segment experiencing a 2% drop. This segment’s investment income fell by 6%, and commercial revenues declined by 4%. The company’s Home Warranty segment, however, showed a slight improvement with a 1% increase in total revenues.Ken DeGiorgio, CEO of First American Financial, attributed the weaker performance to challenging market conditions in the real estate and mortgage industries, which remained subdued due to elevated mortgage rates and low inventory levels. Despite these headwinds, the company has continued to invest in strategic initiatives aimed at long-term growth, such as expanding title plant assets and developing technology solutions.The company’s pretax margin for the Title Insurance and Services segment was reported at 5.5%, or 4.8% on an adjusted basis, which includes a $6 million write-off of uncollectible balances. The Home Warranty segment’s pretax margin improved to 19.3%, or 18.8% on an adjusted basis.First American Financial’s commitment to its workforce and culture was underscored by its ninth consecutive recognition as one of the 100 Best Companies to Work For by Great Place to Work® and Fortune Magazine.As for the future, DeGiorgio expressed that while market challenges are expected to persist throughout the year, the company anticipates modest revenue growth and title margins similar to those achieved in 2023.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More