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Shares of International Business Machines Corp. fell on Tuesday in the enlarged session after the tech giant exceeded Wall Street's expectations for quarterly earnings, but not revenues, which declined further as it had done for 2018.
IBM
IBM, + 2.83%
stocks fell 4% after normal hours, after a 2.8% increase to close the regular session at $ 145.12. Tuesday, the Dow Jones Industrial Average
DJIA, + 2.17%
and the S & P 500 index
SPX, + 2.15%
gained 2.2%, and the Nasdaq Composite Index, very technical
COMP + 2.89%
finished up 2.9%.
In the third quarter, IBM reported net earnings of $ 2.69 billion, or $ 2.95 per share, compared to $ 2.73 billion or $ 2.92 per share for the same period last year. Adjusted earnings were $ 3.42 per share. Analysts surveyed by FactSet were counting on adjusted earnings of $ 3.40 per share.
Revenues fell to $ 18.76 billion from $ 19.15 billion for the same period last year. Wall Street expects a turnover of 19.1 billion USD with IBM, and an estimated business turnover of 19.27 billion USD.
IBM had a sad run of 23 consecutive quarters of declining sales in January and managed to generate growth for two consecutive quarters until Tuesday's report breaks this shorter series. Some of IBM's newest companies, which are expected to offset the decline of legacy companies for years, have not produced as much as needed to avoid a downturn.
Cognitive solutions, including Watson, have been one of the least performing segments of IBM in this results report. The unit's revenues decreased 6% to $ 4.1 billion from the same quarter last year, while analysts expected revenue to fall by 2% to 4.31%. billions of dollars.
Technology services and the cloud platform – which includes IBM Cloud, formerly known as Bluemix – posted a stable business figure of $ 8.3 billion compared to the previous year , while analysts expected $ 8.33 billion.
Cloud revenues are good considering the competition, but this is turning into a commodity market, as opposed to AI and security, which is generating better margins, said Maribel Lopez, Lopez Senior Analyst Research.
"As for the cloud, IBM has done better in the last quarter than it has been awarded, but we do not know if it is possible to continue its momentum this quarter and in the coming quarters," Lopez told MarketWatch, adding that Microsoft Corp.
MSFT, + 3.16%
It's proven to be a formidable competitor in the field.
"On the other hand, cognitive services are more difficult to sell than any provider had imagined," Lopez said.
Global turnover in business services grew 1 percent to $ 4.1 billion from the same period last year, while Wall Street forecast a drop of 0.7 percent to 4 percent. , $ 6 billion. Systems revenue rose 1% to $ 1.7 billion, while analysts expected $ 1.78 billion.
Global business services include consulting services for enterprise design modernization and enterprise and cloud applications, while systems activities include the company's operating system software and mainframe operations, including including the IBM z14 server line.
Of the 24 analysts who cover IBM, 10 have buy or overweight ratings, 11 have holding ratings, and three have sell or underweight ratings, with an average price target of $ 163.77. , according to FactSet.
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