IBM Has Another Revenue Drop During Its Transition

By Ted Greenwald 

International Business Machines Corp. reported declines in quarterly profit and sales in the third quarter, a sign the company's drawn-out transformation still has a way to go.

Revenue dropped 0.4% to $19.15 billion, marking its 22nd consecutive quarter of year-over-year declines.

IBM is trying to transition from older, shrinking businesses, such as building and maintaining technology on customers' premises, to higher-growth operations like delivering pay-as-you-go services over the internet. It has placed big bets on emerging technologies, such as artificial intelligence and blockchain, which is the networked ledger at the heart of bitcoin digital currency.

The transition initiated five years ago by Chief Executive Ginni Rometty, though, has been slow.

Newer businesses such as cloud computing and the Watson artificial intelligence platform, called strategic imperatives by IBM, grew 10% over the past 12 months, accounting for 45% of the company's revenue, the company said. Cloud revenue jumped 25% in the past 12 months.

In all, IBM reported a profit of $2.73 billion, or $2.92 per share, compared with earnings of $2.85 billion, or $2.98 per share a year earlier.

The Armonk, N.Y., computing giant reported per-share earnings of $3.30 on an adjusted basis, omitting such items as acquisition- and retirement-related charges. Analysts had expected $3.28 a share, on $18.6 billion in revenue, according to a survey by Thomson Reuters.

Shares in the 106-year-old company rose 3% to $151 in after-hours trading, after closing down 0.2% on Tuesday. The stock had fallen 12% this year, compared with the S&P 500's gain of 14%.

IBM reiterated its annual forecast, calling for adjusted per-share earnings of at least $13.80.

Write to Ted Greenwald at [e-mail]

(END) Dow Jones Newswires

October 17, 2017 16:58 ET (20:58 GMT)

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