Aurelia Butler

(Reuters) -IBM Corp beat Wall Street expectations for first-quarter profit on Wednesday and signaled demand for IT services was better than feared, sending shares up 3.5% after the bell.The company’s software and consulting businesses rose 6% and 8.2%, respectively, at constant currency in the first quarter, in line with IBM (NYSE:IBM)’s targets. Big Blue also reiterated its full-year free cash flow forecast of $10.5 billion. “Investors blew a sigh of relief that IBM’s quarterly update was better than feared,” said Jesse Cohen, senior analyst at Investing.com.The IT industry is facing a slowdown after a post-pandemic surge in demand for services such as consulting, as high inflation and interest rates have forced customers to put the brakes on spending. Growth at IBM’s consulting and software business has also slowed down from the mid-to-high teens it saw last year.IBM Chief Executive Officer Arvind Krishna said clients were prioritizing digital transformation projects that focus on “cost takeout, productivity and quick returns”, mirroring comments by Accenture (NYSE:ACN) executives last month.As a result, IBM cut its full-year consulting revenue growth forecast to 6%-8% from earlier expectations of high single-digit percentage growth.It forecast annual revenue growth between 3% and 5% at constant currency, having said in January it expected revenue to rise at the lower-end of its mid-single-digit target. Analysts on average expect a 3.6% growth, according to Refinitiv data.Analysts, however, believe IBM is better equipped to weather cuts in corporate IT spending.IBM also has less exposure to U.S. regional banks and is largely shielded from the banking crisis in the country, with Chief Financial Officer James Kavanaugh noting regional banks make up less than 1% of the company’s revenue in the United States. Total revenue in the first quarter rose 4.4% at constant currency to $14.25 billion, compared with analysts’ estimate of $14.35 billion.Excluding items, it reported earnings of $1.36 per share, beating estimates of $1.26. More

Reuters) -Seagate Technology Holdings PLC has agreed to pay a $300 million penalty in a settlement with U.S. authorities for shipping over $1.1 billion worth of hard disk drives to China’s Huawei in violation of U.S. export control laws, the Department of Commerce said on Wednesday.Seagate sold the drives to Huawei between August 2020 and September 2021 despite an August 2020 rule that restricted sales of certain foreign items made with U.S. technology to the company. Huawei was placed on the Entity List, a U.S. trade blacklist, in 2019 to reduce the sale of U.S. goods to the company amid national security and foreign policy concerns.The penalty represents the latest in a string of actions by Washington to keep sophisticated technology from China that may support its military, enable human rights abuses or otherwise threaten U.S. security.Seagate shipped 7.4 million drives to Huawei for about a year after the 2020 rule took effect and became Huawei’s sole supplier of hard drives, the Commerce Department said.The other two primary suppliers of hard drives ceased shipments to Huawei after the new rule took effect in 2020, the department said. Though they were not identified, Western Digital Corp (NASDAQ:WDC) and Toshiba (OTC:TOSYY) Corp were the other two, the U.S. Senate Commerce Committee said in a 2021 report on Seagate.The companies did not respond to requests for comment.Even after “its competitors had stopped selling to them … Seagate continued sending hard disk drives to Huawei,” Matthew Axelrod, assistant secretary for export enforcement at the Commerce Department’s Bureau of Industry and Security said in a statement. “Today’s action is the consequence.”Axelrod said the administrative penalty was the largest in the history of the agency not tied to a criminal case. Seagate’s position was that its foreign-made drives were not subject to U.S. export control regulations, essentially because they were not the direct product of U.S. equipment.”While we believed we complied with all relevant export control laws at the time we made the hard disk drive sales at issue, we determined that … settling this matter was the best course of action,” Seagate CEO Dave Mosley said in a statement.In an order issued on Wednesday, the government said Seagate wrongly interpreted the foreign product rule to require evaluation of only the last stage of its manufacturing process rather than the entire process.Seagate made drives in China, Northern Ireland, Malaysia, Singapore, Thailand, and the United States, the order said, and used equipment, including testing equipment, subject to the rule.In August, the U.S. Department of Commerce sent the company a “proposed charging letter,” warning the company that it may have violated export control laws. The letter kicked off some eight months of negotiations. Reuters broke news of the charging letter in October.Seagate’s $300 million penalty is due in installments of $15 million per quarter over five years, with the first payment due in October. It also agreed to three audits of its compliance program, and is subject to a five-year suspended order denying its export privileges.The company said in light of the settlement it would report its fiscal third quarter 2023 financial results before the market opens on Thursday, rather than a previous plan for after the close of trade. More

TOKYO (Reuters) – Most Japanese firms want Bank of Japan Governor Kazuo Ueda to focus on financial market stability at his first policy meeting next week, with few seeing benefits from any easing of its ultra-loose monetary policy, a Reuters monthly poll showed.Ueda has so far signalled his intent to maintain those loose conditions, despite telling parliament this week that Japan was still on course to reach the central bank’s 2% core inflation target. Of nearly 500 major companies polled, 52% said they hoped for financial stability measures, with a third saying Ueda should maintain the policies of his predecessor, Haruhiko Kuroda.”Markets are volatile, so its desirable for the new board to uphold the stability of the old one,” a representative from an electrical machinery maker said, on condition the company wasn’t identified.That corporate caution comes after the International Monetary Fund cut its global economic growth outlook for 2023 as it warned of a risk posed by a possible severe flare-up of financial system turmoil, saying that nervous investors could try to test the “next weakest link” in the financial system following the Swiss government-engineered rescue of Credit Suisse. Slightly less than a quarter of the Japanese firms surveyed by Reuters said they wanted a revision of the BOJ’s negative interest rate policy, down from nearly a half two months ago when Ueda was nominated to his post. Fewer companies also urged the central bank to revise its inflation target, down to 16% from 28% of those polled in February. “The zero rate policy has been eased, but if interest rises that could lead to an increase in bad debt that could invite a recession,” said a manager at a steel manufacturer, who commented on condition of anonymity. Markets, which have been rife with speculation that Ueda will phase out that stimulus, will be closely watching his first policy meeting on April 27-28, when the BOJ board will unveil fresh quarterly growth and inflation forecasts extending through fiscal 2025.In his first appearance in parliament as governor on Wednesday, Ueda defended the purchasing of government bonds that Kuroda ramped up as part of his push for 2% inflation. He also urged companies to invest in their workforces.The Reuters Corporate Survey, conducted for Reuters by Nikkei Research between April 5 and April 14, canvassed 493 big non-financial Japanese firms, including 246 manufacturers and 247 non-manufacturers.They were polled on condition of anonymity, allowing respondents to speak more freely.Click here for a more detailed breakdown of the poll results. More