IBM Slips on Mixed Earnings

By Chris Lange Updated Jan 12, 10:01AM EST · Published Jul 18, 4:22PM EDT

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IBM Slips on Mixed Earnings — © Thinkstock

International Business Machines Corp. (NYSE: IBM) reported its most recent quarterly results after markets closed Tuesday. Big Blue said that it had $2.97 in earnings per share (EPS) and $19.3 billion in revenue versus consensus estimates from Thomson Reuters that called for $2.74 in EPS and $19.45 billion in revenue. The second quarter from last year had $2.95 in EPS and $20.24 billion in revenue.

In terms of its business segments IBM reported:

Cognitive Solutions (includes solutions software and transaction processing software) — revenues of $4.6 billion, down 2.5% (down 1.4% adjusting for currency). Pre-tax income increased at a double-digit rate.

Global Business Services (includes consulting, global process services and application management) — revenues of $4.1 billion, down 3.7% (down 1.7% adjusting for currency). Strategic imperatives grew 8% led by the cloud and mobile practices.

Technology Services & Cloud Platforms (includes infrastructure services, technical support services and integration software) — revenues of $8.4 billion, down 5.1% (down 3.6% adjusting for currency). Strategic imperatives, driven by hybrid cloud services, grew 20%.

Systems (includes systems hardware and operating systems software) — revenues of $1.7 billion, down 10.4% (down 9.6% adjusting for currency).

Global Financing (includes financing and used equipment sales) — revenues of $415 million, down 2.2% (down 1.7% adjusting for currency).

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Big Blue maintained its guidance for full-year EPS at $13.80 and free cash flow expectations. The current consensus estimates are calling for $13.68 in EPS and $78.21 billion in revenue for the full year.

On the books, cash, cash equivalents, and marketable securities totaled $12.3 billion at the end of the quarter, compared with $8.5 billion at the end of the previous fiscal year.

Ginni Rometty, IBM Chairman, President and CEO, commented:

In the second quarter, we strengthened our position as the enterprise cloud leader and added more of the world’s leading companies to the IBM Cloud. We continue to innovate, adding regtech capabilities to our portfolio of Watson offerings; developing solutions based on emerging technologies such as Blockchain; and reinventing the IBM mainframe by enabling clients to encrypt all data, all the time.

Shares of Big Blue closed Tuesday at $154.10, with a consensus analyst price target of $162.93 and a 52-week range of $147.79 to $182.79. Following the release of the earnings report, the stock was initially down just over 1% at $152.32 in the after-hours trading session.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.