Analysts Were Right, Q3 Was Hard for IBM
“In the third-quarter we continued to expand operating margins and increased earnings per share, but fell short on revenue,” explained International Business Machines (NYSE:IBM) Chairman, President, and Chief Executive Officer Ginni Rometty in the company’s earnings press release.
The world’s largest technology-services company reported third-quarter earnings that surpassed Wall Street’s expectations, but revenue came in below estimates. IBM reported that, excluding certain items, earnings rose to $3.99 per share, from $3.62 per share in the year-ago quarter, while revenue dropped 4 percent to $23.72 billion from $24.75 billion a year ago. Comparatively, analysts had expected the company to report earnings per share of $3.96 on a revenue of $24.75 billion.
Analysts did warn that this quarter could be a difficult one for technology companies such as IBM because of political instability, volatile currency rates, and lower corporate spending on IT. While the company has its own particular demons, as the first large IT vendor to report third quarter results, its earnings will serve as warning sign for Wall Street. “IBM is the first of the large IT vendors to report September quarter results, and given the company’s broad reach across the IT world, we believe investors will focus on the implications across the tech world at large,” Brian White at Cantor Fitzgerald said in a report published before the company’s results were released after the bell on Wednesday.