It’s the best part of fall: the air is crisp, the kids are back to school, the apples are ripe, and large companies begin to announce their third-quarter results. The reports from International Business Machines (IBM, which trades as NYSE: IBM) have been eagerly awaited, as some analysts expected to see Big Blue showing some improvement.
Unfortunately, that wasn’t what happened at all.
According to CNBC, IBM (NYSE: IBM) posted earnings in the 3rd Quarter of $22.40 billion, with shares at $3.68. Analysts had been hoping to see earnings closer to $23.37 billion, and shares at $4.31.
Ginni Rometty, company president and CEO, said in a statement that the company was disappointed in its performance over the quarter. She highlighted that the company did well in strategic areas, but stockholders seemed to disagree. According to Reuters, stocks closed down 7.1 percent for NYSE:IBM at $169.10 a share. IBM is also said to have abandoned its target for 2015 earnings.
And that’s not the only announcement made by IBM today:
GLOBALFOUNDRIES to acquire IBM's microelectronics business http://t.co/rHeAgeG8cQ
— IBM (@IBM) October 20, 2014
The news that IBM would be paying GlobalFoundries $1.5 billion over the next three years to take its suffering chip business off its hands. The news that GlobalFoundries does intend to maintain the IBM plants currently located in New York and Vermont came as welcome relief in those communities, as GlobalFoundries has announced that there will be no layoffs.
Along with the manufacturing company itself, GlobalFoundries will receive a variety of intellectual property, patents, the two manufacturing plants in the Northeast, as well as the IBM (NYSE: IBM) commercial electronics business.
The agreement also means that GlobalFoundries will be the exclusive provider of semiconductor technology for 22, 14, and 12 nanometer semiconductors for the next 10 years. IBM hopes that this will allow them to focus on research regarding semiconductors, as well as cloud technology, mobile and big data services, and secure transaction-optimized systems.
GlobalFoundries was originally spun off from Advanced Micro Devices, AMD, in 2009 to handle chip production for that company. Dr. Sanjay Jha, GlobalFoundries CEO, said in a press release that this transaction would both build upon established relationships in Vermont and New York, and increase advanced manufacturing available in the United States.
“This acquisition solidifies GlobalFoundries’ leadership position in semiconductor technology development and manufacturing,” said Jha. “We can now offer our customers a broader range of differentiated leading-edge 3D transistor and RF technologies, and we will also improve our design ecosystem to accelerate time-to-revenue for our customers.”
The 5,000 employees in the East Fishkill, New York IBM (NYSE:IBM) plant, and the 4000 employees in the Essex Junction, Vermont plant, were glad to hear it.