IBM shares fell in straight-line trading after the company reported lower profit margins and sales excluding exchange rate adjustments in the first quarter.
The International Business Machines Corp. posted $ 19.1 billion in revenue of $ 18.8 billion in the first quarter. That's a 5 percent gain since last year, but only when the weak US dollar was taken into account. Without him, sales growth was unchanged. Growth in key Strategic Imperatives businesses, including the company's cloud, analytics and mobile-focused businesses, grew 1
5.8 percent to 151.54 dollars, in extended trade after the end of the day by 1.9 percent.
CEO Ginni Rometty is working to pull IBM back from more than five years of decline. It reversed the trend late last year, though this upswing was not as much driven by the new companies as by the cyclical demand for mainframe servers. Investors are watching to see if they can increase profits in IBM's newer software and services to sustain the improvement as the hurdle of hardware sales eases.
In the meantime, Rometty has relocated thousands of jobs to other countries and worked to reduce costs. Nevertheless, the gross profit margin in the first three months of the previous year fell by 0.6 percentage points to 43.2 percent compared to the same period of the previous year. During the quarterly conference call, Chief Financial Officer James Kavanaugh said margins would stabilize "immediately" in the first quarter.
On average, analysts also expected IBM to increase its previously announced earnings guidance for the full year. The company pledged $ 13.80 per share.
Rometty had set a target for IBM of $ 40 billion in strategic revenue this year, which would mean that these newer products would account for more than half of the company. The company said on Tuesday that it was on track to achieve that goal, and that the new businesses accounted for 47 percent of sales in the last 12 months.
Armonk, New York-based IBM, adjusted earnings per share $ 2.45 in the quarter, down 4 percent over the previous year. According to data collected by Bloomberg, analysts expected an average of $ 2.42 per share.
Some investors are not waiting to see if Rometty will continue the return of Big Blue to its glory days as one of the US tech industries. Warren Buffett, who contributed more than $ 10 billion to the company in 2011, has almost completely abandoned his position in recent months. His conglomerate, Berkshire Hathaway Inc., cut his share by 94 percent in the fourth quarter, beating Buffett's rating as flawed.