Prime News: IBM Fell Short of Revenue Estimates, Stock Drops

International Business Machines Corp. posted a lower-than-expected quarterly revenue however, it managed to beat earnings estimates. IBM stock fell 2.5 percent on Tuesday.

Growth in its higher-margin businesses which include cloud and artificial intelligence services failed to offset losses across its business segments.

IBM in recent years has shifted focus across its business, from high margin areas like cloud, cybersecurity and data analytics, in order to counter the slowdown in its hardware and software businesses. Revenue from these initiatives increased by five percent in the second quarter ended June 30.

The 4.7 percent decline in second-quarter revenue, to $19.3 billion, was its 21st straight quarter of falling sales at the company. Profit margins narrowed across all business units. Profit dropped 6.9 percent from the previous year.

Earnings results surpassed analysts’ expectations. Still, revenue was below forecasts, while shares in Big Blue dropped over three percent after-hours on Tuesday.

IBM reiterated its guidance of at least $13.80 in earnings per share for the full year of this year, in line with its guidance from the first quarter.

The company’s Technology Services and Cloud Platforms division reached $8.4 billion in revenue, lower by 5.1 percent year over year. The Cognitive Solutions business came in at $4.6 billion in revenue, lower by 2.5 percent.

IBM’s Global Business Services group produced $4.1 billion in revenue, off by 3.7 percent, and the Systems segment contributed $1.7 billion in revenue, lower by 10.4 percent.

The material has been provided by InstaForex Company – www.instaforex.com

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