IBM Earnings: Stock Drops As IBM Posts Another Miss On Revenue

Ginni RomettyAPIBM CEO Ginni Rometty

IBM just posted its third-quarter earnings shortly and we’re covering live.

Revenue is $US23.7 billion, a miss. EPS came in at EPS $US3.99, that’s a beat.

Wall Street expected revenue to be flat at $US24.75 billion while per-share earnings were expected to grow 9.3% to $US3.96.

Stock is dropping in after hours trading, down almost 5%.

This is an important quarter for CEO Ginni Rometty. The year so far has been mixed. Last quarter, IBM missed on revenues, but beat on profits. And before that, IBM posted its worst quarter in years, missing on both revenue and earnings. That was the first revenue miss for 31 straight quarters dating back to early 2005, according to the Wall Street Journal.

Thanks to those results, IBM instituted layoffs layoffs last quarter. It didn’t say how many people it would cut, or where, but some analysts put the number at between 6,000 and 8,000. IBM had about 434,246 people in its workforce worldwide in 2012.

The company had reportedly tried to sell its server businesses to the Lenovo Group, too, but the deal fell through.

In the press release, Rometty acknowledged that revenue “fell short” and said, “We are taking action to improve execution in our growth markets unit and in the elements of our hardware businesses that are under performing.”

Here are some more details from the press release.

Revenue: $US23.7 billion, down 4 per cent, down 2 per cent adjusting for currency:

– Software revenue up 1 per cent, up 2 per cent adjusting for currency;

— Key branded middleware up 3 per cent; up 4 per cent adjusting for currency;

– Services revenue down 3 per cent, up 1 per cent adjusting for currency;

— Global Business Services revenue flat, up 5 per cent adjusting for currency;

– Services backlog of $US141 billion, up 2 per cent, up 6 per cent adjusting for currency;

– Systems and Technology revenue down 17 per cent, down 16 per cent adjusting for currency;

— System z mainframe revenue up 6 per cent; up 7 per cent adjusting for currency;

– Growth markets revenue down 9 per cent, down 5 per cent adjusting for currency;

– Business analytics revenue up 8 per cent year to date;

– Smarter Planet revenue up more than 20 per cent year to date;

– Cloud revenue up more than 70 per cent year to date;

— Revenue in third-quarter exceeds $US1 billion, of which about $US460 million is delivered as a cloud service;

Maintaining full-year 2013 Operating (non-GAAP) EPS expectation of at least $US16.25; at least $US16.90, excluding second-quarter workforce rebalancing charge.

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