IBM was expected to report adjusted earnings of $3.79 a share on sales of $20.9 billion, according to a FactSet survey of analysts.
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Revenue from what IBM calls its “strategic imperatives”, or areas it has identified as critical to growth, were up more than 20 percent from a year ago. The company, which gets more than half its revenue from overseas, said it expected a slightly greater currency impact in the second half of the year.
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We expanded margins, continued to innovate across our portfolio and delivered strong growth in our strategic imperatives of cloud, analytics and engagement, which are becoming a significant part of our business”,
said Ginni Rometty, IBM chairman, president and chief executive officer.
Consolidated net income dropped to $3.45bn, or $3.50 per share, for the second quarter, from $4.14bn, $4.12 per share, a year earlier.
Global Technology Services segment revenues fell 10 percent to $8.1 billion.
Sales from computing hardware were off 32 percent year over year.
In the case of IBM, the firm is now graded more steeply on revenue than profit; its ability to squeeze profit out of its current top line is pleasant, but not a long-term solution to its slimming. This will be the first full quarter of sales of the new mainframe. During last 3 month period, 0.07% of total institutional ownership has changed in the company shares. Revenue from Brazil, Russia, India and China (BRIC) fell 35 percent. The company ended its quarter with $8.4 billion in cash and equivalents, down modestly from the year ago quarter.
New York-based IBM, now valued at $169.88 billion, has a high Wall Street price target of $198.00, which reflects a return potential of 15% over the last closing price of the stock. In the past week, the shares have outperformed the S&P 500 by 0.9% and the outperformance increases to 2.5% for the last 4 weeks.
All of IBM’s major units posted a decline in revenue. Those avenues of growth include segments such as systems security, cloud services, and Internet of Things (IoT).
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Software revenue fell 10 percent.
