IBM shares are tumbling after the company announced disappointing Q3 earnings.
The business services giant announced $US3.68 per share of operating earnings from continuing operations, which is much weaker than the $US4.32 expected by analysts.
Revenue fell 4% year-over-year to $US22.4 billion.
“We are disappointed in our performance,” CEO Ginni Rometty said. “We saw a marked slowdown in September in client buying behaviour, and our results also point to the unprecedented pace of change in our industry. While we did not produce the results we expected to achieve, we again performed well in our strategic growth areas — cloud, data and analytics, security, social, and mobile — where we continue to shift our business.”
This is concerning, not just for IBM investors. As a global provider of business software and services, this could be reflective of problems in the global economy.
IBM reported declines in all markets: America’s revenue fell 2%, Europe/Middle East/Africa revenue fell 2%, and Asia-Pacific revenue dropped 9%. Management said revenues in its so-called “growth markets” fell 6%, with Brazil, Russia, India, and China revenues falling 7%.
Shares of IBM were down by about 7.3%, or $US13.30 per share, in premarket trading. IBM is a component of the Dow, and every 1-point move in a Dow stock moves the Dow by 6.42195 points. In other words, IBM’s sell-off is hacking off about 85 points from the Dow.
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