IBM quarterly revenue, full-year forecast disappoints

IBM quarterly revenue, full-year forecast disappoints

International Business Machines Corp reported a bigger-than-expected drop in quarterly revenue on Tuesday, an indication that its efforts to pivot to newer businesses such as cloud, analytics, software and services remained patchy at best.

FILE PHOTO: A man stands near an IBM logo at the Mobile World Congress in Barcelona
FILE PHOTO: A man stands near an IBM logo at the Mobile World Congress in Barcelona, Spain, February 25, 2019. REUTERS/Sergio Perez/File Photo

REUTERS: International Business Machines Corp forecast full-year revenue below estimates after reporting a bigger-than-expected drop in first-quarter revenue on Tuesday, hurt by tapering demand for its latest mainframe computers and a stronger dollar.

Shares of the technology giant fell 2 percent after the company forecast 2019 adjusted operating profit to be a cent below analysts' expectation of US$13.91 per share.

Under Ginni Rometty's stewardship, the company has shed many of its traditional hardware businesses and beefed up the growth areas through deals such as its US$34 billion deal for Red Hat Inc, by far the company's biggest acquisition.

IBM returned to annual revenue growth after seven years in the last quarter of 2018, triggering expectations that its strategy was taking roots.

Shares of the company have gained about 18 percent since reporting its fourth-quarter results in January.

However, in the reported quarter its cloud and cognitive segment, which includes analytics, cybersecurity and artificial intelligence, fell 1.5 percent to US$5.04 billion, but beat FactSet estimates of US$4.18 billion.

Revenue from its other main segments also fell and missed FactSet estimates.

"We see limited upside to revenues due to currency headwinds, tough comps from the mainframe cycle, and a potential pullforward of software revenues into Q4," Bernstein analyst Toni Sacconaghi said.

IBM's revenue slipped 4.7 percent to US$18.18 billion in the first quarter ended March 31 and missed the average analyst estimate of US$18.46 billion, according to IBES data from Refinitiv.

Its net income fell US$1.59 billion, or US$1.78 per share, compared with US$1.68 billion, or US$1.81 per share, a year earlier.

Excluding special items, the company earned US$2.25 per share and beat analysts' expectation of US$2.22 per share.

(Reporting by Sayanti Chakraborty in Bengaluru; Editing by Arun Koyyur)

Source: Reuters