IBM Earnings Just Can’t Cut It

By Chris Lange Updated Jan 11, 4:20PM EST · Published Oct 16, 4:21PM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

IBM Earnings Just Can’t Cut It — © MajestiX B / Shutterstock.com

International Business Machines Corp. (NYSE: IBM) reported its third quarter financial results after the markets closed on Tuesday. Big Blue said that it had $3.42 in earnings per share (EPS) and $18.8 billion in revenue, compared with consensus estimates that called for $3.40 in EPS and $19.1 billion in revenue. The same period from last year had $3.26 in EPS and $19.15 billion in revenue.

In terms of its segments, IBM reported:

Cognitive Solutions (includes solutions software and transaction processing software) — revenues of $4.1 billion, down 6 percent (down 5% adjusting for currency), with growth in Watson health, security solutions, and key strategic areas in analytics.

Global Business Services (includes consulting, application management and global process services) — revenues of $4.1 billion, up 1% (up 3% adjusting for currency), led by consulting. Gross profit margin increased 270 basis points.

Technology Services & Cloud Platforms (includes infrastructure services, technical support services and integration software) — revenues of $8.3 billion, down 2% (flat year to year adjusting for currency), with growth in cloud revenue. Gross profit margin increased 120 basis points.

Systems (includes systems hardware and operating systems software) — revenues of $1.7 billion, up 1% (up 2% adjusting for currency), driven by growth in Power and IBM Z.

Global Financing (includes financing and used equipment sales) — revenues of $388 million, down 9% (down 7% adjusting for currency).

Looking ahead to the 2018 full year, the company expects to see EPS of $13.80 and free cash flow of roughly $12 billion, with a realization rate greater than 100%. The consensus estimates call for $13.80 in EPS and $80.17 billion in revenue.

[nativounit]

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

IBM’s progress and momentum this year in the emerging, high-value segments of the IT industry are driven by our innovative technology, deep industry expertise and commitment to trust and security. Our leadership in the technology and services that deliver hybrid cloud, AI, blockchain, analytics and security has helped drive our overall performance, and is helping our clients unleash the full business value of these innovations.

Shares of IBM closed Tuesday at $145.04, with a consensus analyst price target of $163.30 and a 52-week range of $137.45 to $171.13. Following the announcement, the stock was down over 3% at $139.75 in the after-hours trading session.

[wallst_email_signup]

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.