IBM shares slumped by more than 4% after the company delivered a worst-than-expected first quarter earnings report that disappointed investors on the company’s supposed recovery from its weak performance in the past couple of quarters.

Earnings Report

International Business Machines Corp reported its 20th consecutive revenue decline at $18.16 billion for the quarter, 2.8% lower than the same quarter from last year. Average analyst estimates ranged at around $18.39 billion.


Although revenue from some of IBM’s businesses including their Watson cognitive solutions revenue which rose 2.1% to $4.1 billion, most of its primary revenue sources were down with its systems revenue sinking 16.8% lower to revenues of $1.4 billion. The company’s global business service also slumped by 3% while its revenue from technical services stands at $8.2 billion 2.5% lower from the previous quarter.

IBM’s profits also fell by 13% for the first quarter which further disappointed investors as the company is currently undergoing expansion and has been exerting its efforts lately in raising its revenue lines.

For its share earnings, the company was able to meet analysts estimates of $2.35 EPS delivering an earnings of $2.38 per share. IBM currently has underperformed in the Dow Jones Industrial Average and in the S&P 500.

CFO Confident On IBM Recovery

On Thursday’s closing bell, IBM Chief financial officer Martin Schroeter stated that the company will grow again and that IBM is currently taking the time to make sure that their investment remains in the right places. He also added that they are making sure that high value profile can be acquired by the company from their investments.  

"We have not been solely focused on just that top line, headline number of 'when can we print growth.' Had we wanted to print growth, we probably wouldn't have divested of $8 billion worth of businesses."  Schroeter added.

He also mentioned that they currently have plans to cut back overseas investments where currency movement impacts the investment. Regarding their current businesses, the CFO said that the company is now to focus more on cloud computing as more and more people and businesses transition to the type of service rather than sticking to traditional computing solutions. Their Watson cognitive solutions is also set to give them higher revenue and remains to be one of the key aspects of IBM’s business.

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