IBM quarterly revenue, full-year forecast disappoints

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International Business Machines (IBM) Corp reported 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 two percent. The company reiterated 2019 adjusted operating profit of "at least" 13.90 U.S. dollars per share. Analysts on average were expecting 13.91 U.S. dollars 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 34 billion U.S. dollars 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 5.04 billion U.S. dollars, but beat FactSet estimates of 4.18 billion U.S. dollars.

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 pull-forward of software revenues into Q4," Bernstein analyst Toni Sacconaghi said.

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

Its net income fell 1.59 billion U.S. dollars, or 1.78 U.S. dollars per share, compared with 1.68 billion U.S. dollars, or 1.81 U.S. dollars per share, a year earlier.

Excluding special items, the company earned 2.25 U.S. dollars per share and beat analysts' expectation of 2.22 U.S. dollars per share.

Source(s): Reuters