IBM Corp’s first-quarter net income and revenue declined due to delays in closing several of the technology company’s large software and mainframe computer deals. The results fell short of Wall Street’s expectations, sending IBM’s stock lower in after-hours trading.
The company said on Thursday that it earned US$3.03 billion, or US$2.70 per share, in the January-March period. That is down 1 percent from US$3.07 billion, or US$2.61 per share, in the same period a year earlier. Last year’s quarter had more outstanding shares, which lowers per-share results.
Earnings excluding one-time items were US$3 per share in the latest quarter, below Wall Street’s expectations of US$3.05 per share.
Revenue fell 5 percent, to US$23.41 billion from US$24.67 billion. Analysts polled by FactSet expected revenue to be nearly unchanged at US$24.65 billion.
“Despite a solid start and good client demand, we did not close a number of software and mainframe transactions that have moved into the second quarter,” IBM chief executive officer Ginni Rometty said in a statement. “The services business performed as expected, with strong profit growth and significant new business in the quarter.”
IBM chief financial officer Mark Loughridge said in a conference call that weakness in the Japanese yen hurt earnings. A weak yen translates to fewer dollars for IBM on sales in Japan. Adjusted for currency fluctuations, IBM said its revenue would have only declined by 3 percent for the quarter, rather than 5 percent.
IBM kept its full-year guidance intact. It still expects adjusted, per-share earnings of at least US$16.70 for this year. Analysts predict US$16.77.
Rometty said the company expects to close the delayed transactions and expects to benefit from investments in growth initiatives. She said IBM is also trying to improve the weaker parts of its business.
In the latest quarter, revenue from technology services declined 4 percent to US$9.6 billion and business services revenue fell 3 percent to US$4.5 billion. Software revenue was flat at US$5.6 billion, while hardware revenue dropped 17 percent to US$3.1 billion.
Shares of the company fell US$9.90, or 4.8 percent, to US$197.25 in after-hours trading. Before the earnings announcement, the stock closed down US$2.52 at US$207.15.