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IBM tops 2Q profit expectations, misses revenue forecasts

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ARMONK, New York — IBM said revenue and profit fell in the second quarter, although the company managed to beat Wall Street earnings estimates by cutting costs while pursuing new business opportunities.

Shares dropped almost 5 percent in after-market trading Monday after the release of the report.

It reported second-quarter profit fell nearly 17 percent to $3.45 billion, while sales fell more than 13 percent to $20.8 billion.

On a per-share basis, International Business Machines Inc. said it had profit of $3.50. After adjusting for non-recurring costs, earnings came to $3.84 per share. Analysts surveyed by Zacks Investment Research were expecting adjusted earnings of $3.80 a share.

But revenue fell short of the $21.02 billion expected by analysts surveyed by Zacks.

IBM, based in Armonk, New York, has been struggling to adapt to big changes in the way businesses buy software and other commercial technology. CEO Virginia Rometty says she's working to refocus the company on new tech markets, including data analytics, mobile technology and cloud computing.

The company said revenue from those "strategic imperatives" grew more than 20 percent in the quarter. While revenue fell in the company's traditional hardware, software and services segments, IBM said sales of its new z Systems mainframes rose 9 percent.

IBM said its expenses from continuing operations fell 8 percent to $6.2 billion. The company expects full-year earnings in the range of $15.75 to $16.50 per share.

IBM shares finished at $173.32 in regular market trading Monday before the earnings report was released. In aftermarket trading, its shares tumbled $8.47, or 4.9 percent, to $164.75.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on IBM at http://www.zacks.com/ap/IBM

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Keywords: IBM, Earnings Report

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