Tuesday 12 December 2017

IBM shares fall as contracts dry up

IBM: third straight quarterly drop in new contracts. Photo: Bloomberg News
IBM: third straight quarterly drop in new contracts. Photo: Bloomberg News

International Business Machines (IBM), the world's largest computer services provider, posted its third straight quarterly drop in new contracts, sending its shares down in extended trading.

Services signings fell 7pc to $11bn (€7.9bn) in the third quarter, New York-based IBM said yesterday in a statement.

The company also posted earnings and sales for the period that exceeded analysts' estimates.

A recovery in technology spending that began after the recession is losing steam, leaving expenditures still short of pre-recession levels, said Keith Bachman, a BMO Capital Markets analyst in New York.

"It's clearly come off a bit from the healthy catch-up in the first half of the calendar year," said Mr Bachman of technology spending. "I don't think we're going to see the same rate of spend as before."

Net income rose 12pc to $3.59bn, or $2.82 a share, from $3.21bn, or $2.40, a year earlier.

Analysts predicted $2.75, the average of estimates compiled by Bloomberg. Sales climbed 3pc to $24.3bn. Analysts had projected $24.1bn.

IBM rose $1.77 to $142.83 at 4pm in New York Stock Exchange composite trading. This month, the shares topped their record high set in 1999, and have extended gains since.

CEO Sam Palmisano is aiming to almost double operating earnings to $20 per share in the next five years. Software will make up about half of profit by then, the company said in May.

IBM has invested in analytics software and services that help predict trends.

Irish Independent

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