IBM shares fall after revenue misses Wall Street estimates

IBM shares fall after revenue misses Wall Street estimates

IBM shares fall after revenue misses Wall Street estimates

The company's closely watched adjusted earnings per share fell to $2.68, but came in slightly higher than analysts' forecasts of $2.66. Refinitiv analysts expected earnings of Dollars 2.67 per share on revenue of USD 18.22 Billion.

The computer services giant has reported falling revenues for five consecutive quarters.

Total revenue fell 3.9 per cent to $18.03 billion, missing analysts' average estimate of $18.22 billion, according to IBES data from Refinitiv.

Despite a drop in total revenue, the company reported revenue growth in both its cloud and cognitive software segment and its global business services segment.

IBM's global technology services unit reported a 5.6 percent drop in revenue to US$6.70 billion.

While total revenue fell, however, revenue from the company's cloud services, which are driving IBM's pivot away from established businesses including mainframe servers, rose 11 per cent to US$5 billion in the third quarter ended September 30.

"Our results demonstrate that clients see IBM and Red Hat as a powerful combination and they trust us to provide them with the open hybrid cloud technology, innovation and industry expertise to help them shift their mission-critical workloads to the cloud".

The question is whether the Red Hat acquisition will boost IBM's growth, next quarter, the quarter after that, or certainly by this time next year, he says. IBM is the fifth largest cloud-computing company by sales, according to research firm Gartner Inc., with a 1.8% market share a year ago.

Systems revenue fell by 14.7% to United States dollars 1.5 Billion, reflecting the end of the IBM z14 product cycle and shipping of the new IBM z15 in the last week of September. Global financing fell 11% year-over-year, which company leaders attributed to the "wind-down of OEM [original equipment manufacturer] commercial financing".

IBM President and CEO Virginia Rometty delivers a speech to participants during the 4th edition of the Viva Technology show at Parc des Expositions Porte de Versailles on May 16, 2019 in Paris, France.

The company reported net cash from operating activities of $3.6 billion for the third quarter. Free cash flow is expected to be around $12 billion.

"We continued our focus on the strength of our balance sheet in the third quarter", says James Kavanaugh, IBM senior vice-president and chief financial officer. Barrow Hanley Mewhinney And Strauss Ltd holds 0.27% of its portfolio in International Business Machines Corporation (NYSE:IBM) for 1.04 million shares.

Ahead of IBM's results, analysts were looking for signs of stabilization in IBM's core business units, as well as the impact of the Red Hat Inc. acquisition on its bottom line.

After its August 2, 2019, post-merger update, IBM's press release on Wednesday noted guidance for full-year GAAP earnings to be at least $10.58 per share and non-GAAP earnings of at least $12.80 per share. The company returned $1.6 billion to shareholders through $1.4 billion in dividends and $0.1 billion in gross share repurchases.

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