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IBM revenue falls in third quarter, missing target

International Business Machines Corp. reported a decline in sales for the third quarter, missing Wall Street's target as revenue weakened in its services, software and hardware segments
For the period ended Sept. 30, IBM reported net income of $3.82 billion, or $3.36 per share, compared to net income of $3.84 billion, or $3.23 per share, for the same period last year Revenue slipped by 5.4% to $24.7 billion
Adjusted net earnings from operations were $3.62 per share
Analysts were expecting earnings of $3.61 per share on revenue of $25.4 billion, according consensus estimates from FactSet
IBM maintained its full-year operating EPS forecast of $15.10

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NEW YORK (MarketWatch)

International Business Machines Corp.’s third-quarter earnings slipped as the technology heavyweight’s revenue fell more than analysts had expected, with its hardware-unit recording a double-digit decline in sales.

revenues for the third quarter.
Big Blue’s shares fell 3.7% to $203.13 in after-hours trading on Tuesday following the report.

IBM has benefited from its push toward higher-margin, complex businesses such as business analytics, and away from crowded fields where companies can compete on price only.

However, worries have emerged that macro-econonmic conditions, particularly in Europe, are causing a slowdown in tech spending.

Revenue has also been affected by currency headwinds recently.

Currency negatively impacted IBM’s revenue growth by nearly $1 billion in the latest period.

IBM has also been making heavy investments in emerging markets, which has helped boost results in recent periods.

However, in the latest quarter, revenue in IBM’s growth markets — which include Brazil, Russia, India and China — slid 1% and were up 4% adjusting for currency.

Overall, IBM reported a profit of $3.82 billion, down from $3.84 billion a year earlier.

On a per-share basis, earnings rose to $3.33 from $3.19 a year earlier, as the latest period had fewer shares outstanding.

Operating earnings, which exclude retirement-plan costs and amortization, rose to $3.62 a share from $3.28 a share.

Revenue slid 5.4% to $24.75 billion, or a decline of 2% when adjusted for currency fluctuations.

IBM’s revenue has now missed analyst estimates for five consecutive quarters.

Analysts polled by Thomson Reuters most recently predicted earnings of $3.61 a share and revenue of $25.36 billion.

Gross margin widened to 47.4% from 46.5%.

Revenue in IBM’s systems-and-technology unit, which includes its hardware business, decreased 13%.

The unit has now seen year-over-year revenue declines for four straight quarters amid tough year-ago comparisons.

The software segment’s revenue slipped 0.9%.

Software had been a key driver for IBM in prior quarters, but the segment recorded flat year-over-year revenue in the second quarter.

Technology services revenue was down 3.9%, while business services revenue declined 6%.

Services backlog rose to $138 billion from $136 billion in the second quarter.

Revenue in the Americas — IBM’s largest market — was down 4%, or down 3% adjusting for currency impacts.

Total sales in Europe, the Middle East and Africa decreased 9%, and was down 1% adjusting for currency.

Total revenue in Asia gained 1%, or up 2% adjusted for currency.

IBM continues to see operating earnings for the year of at least $15.10 a share. The stock, which hit its highest level ever earlier this month, is up 14% over the past three months, through the close.