International Business Machines Corp's <IBM.N> quarterly revenue missed analysts' estimates as growth slowed in its higher-margin businesses that include cloud and artificial intelligence services, while demand for its legacy technology services fell.
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Armonk, New York-based IBM has in recent years shifted focus to pockets of growth across its business — areas such as cloud, cybersecurity and data analytics — to counter a slowdown in its hardware and software businesses.
Revenue from these initiatives, which IBM calls "strategic imperatives," rose 5 percent in the second quarter ended June 30. But the growth was slower than the double-digit percentage increases that the businesses had posted in the past several quarters, which could add to concerns about the pace of IBM's turnaround.
However, revenue from "strategic imperatives" rose 11 percent to $34.1 billion over the past 12 months, the company said.
Revenue in IBM's technology services and cloud platforms business — its largest — fell 5.1 percent to $8.41 billion. Analysts on average had expected $8.58 billion, according to financial data and analytics firm FactSet.
Total revenue dipped 4.7 percent to $19.29 billion, marking the steepest fall in five quarters. IBM has not posted growth in annual revenue since 2011.
Analysts on average had expected revenue of $19.46 billion, according to Thomson Reuters I/B/E/S.
IBM's net income fell to $2.33 billion, or $2.48 per share in the second quarter ended June 30, from $2.50 billion, or $2.61 per share, a year earlier.
Excluding one-time items, IBM earned $2.79 per share, according to Thomson Reuters I/B/E/S, beating analysts' estimates of $2.74.
(Reporting by Pushkala A in Bengaluru; Editing by Sai Sachin Ravikumar)