**IBM Shares Drop After Missing Q3 Revenue Expectations**

IBM's performance in the third quarter did not meet Wall Street's revenue projections, leading to a 3% decline in its share value during extended trading on Wednesday. The tech giant reported mixed results across its business segments, with notable gains in its software division offset by underperformance in its consulting and infrastructure units.

The company's adjusted earnings per share stood at $2.30, surpassing the expected $2.23. However, IBM's revenue of $14.97 billion fell short of the anticipated $15.07 billion. Revenue for the corporation saw a modest year-over-year increase of 1.5%, while a significant one-time pension settlement charge led to a net loss of $330 million, or 36 cents per share, contrasting with the $1.70 billion net income, or $1.84 per share, reported in the same period last year.

IBM's software business showed robust growth, generating $6.52 billion in revenue, a 10% increase that exceeded analyst expectations of $6.37 billion. Particularly impressive was the 14% growth in Red Hat's revenue, up from a 7% rise in the previous quarter. The software segment achieved a gross margin of 83%, the highest across IBM's operations.

Conversely, IBM's consulting revenue decreased slightly to $5.15 billion, just below the forecasted $5.19 billion. The business transformation revenue within this unit grew by 2%, down from 6% in the prior quarter. IBM's infrastructure segment also disappointed, bringing in $3.04 billion in revenue, a 7% decline that did not meet the $3.24 billion expected.

In addition to operational metrics, IBM reiterated its goal of over $12 billion in free cash flow for 2024, having accumulated $6.59 billion in the first nine months of this year. For the upcoming fourth quarter, the company anticipates revenue growth at constant currency to match the third quarter's 2%.

Moreover, IBM disclosed a generative artificial intelligence business now valued at over $3 billion, marking a $1 billion increase from the second quarter. The firm also expanded its network of Oracle product consultants, acquired Oracle services company Accelalpha, and completed the sale of its QRadar cloud software assets to Palo Alto Networks.

Despite the recent dip, IBM's shares have risen around 43% this year, outperforming the S&P 500 index, which has gained about 21% over the same period.