Saturday 16 December 2017

IBM's third quarter earnings flat as sales fall 5pc

Getty Images
Getty Images

Michael Liedtke

IBM's revenue slipped below Wall Street's expectations in the third quarter as the technology company dealt with jittery customers and a weakening euro that undercut its results.

Despite the problems posed by the wobbly economy, IBM's earnings held steady. Much of revenue shortfall was blamed on the economic deterioration in Europe and other parts of the world. That has resulted in weakened international currencies, translating into fewer dollars on sales made abroad.

IBM management also raised the spectre of slowing demand for the company's technology-consulting services and business-software products as corporate customers become more cautious and debt-laden government agencies deal with budget cuts.

After a solid start to the third quarter, business became "more challenging" in September and chief financial officer Mark Loughridge told analysts during a conference call to discuss the quarterly earnings report.

Mr Loughridge sounded confident that several business software deals that didn't get done during the summer would be completed before the end of this year to help boost IBM's fourth-quarter earnings.

IBM signalled its belief that its business would hold up by standing behind its previous earnings forecast for the full year.

Investors, though, seemed a little worried. IBM shares shed $7.30 (€5.60), or 3.5pc, to $203.70 in extended trading after the third-quarter numbers came out.

IBM, which is based in Armonk, New York, is considered a good gauge of technology demand because it sells to major companies and governments throughout the world.

It also boasts a near decade-long record of uninterrupted prosperity.

The latest three-month period marks the 39th consecutive quarter in which IBM's earnings per share was higher than the previous year.

The company has been able to thrive because it locks many of its customers into contracts that guarantee regular payments even in tough times.

Revenue for the quarter fell 5pc from the same time last year to $24.7bn -- about $700m below the average estimate of analysts surveyed by FactSet. (AP)

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