IBM misses revenue estimates as server sales slow
International Business Machines Corp missed Wall Street estimates for third-quarter revenue on Tuesday, weighed down by slowing demand for its mainframe servers.
Overall revenue slipped 2.1 percent to $18.76 billion in the three months ended Sept. 30, missing financial analysts’ average estimate of $19.10 billion, according to I/B/E/S data from Refinitiv.
IBM’s systems unit, which includes mainframe servers sold to large organizations, climbed about 1 percent, compared with a 25 percent jump in the previous quarter.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| IBM | INTERNATIONAL BUSINESS MACHINES CORP. | 227.41 | +0.49 | +0.22% |
Analysts have said sales of IBM’s z14 servers, introduced about one year ago, are slowing down as customers await the launch of newer machines before upgrading.
Still, systems sales of $1.74 billion fell short of analysts’ estimates of $1.79 billion, according to FactSet.
IBM’s cognitive software business, which houses artificial intelligence platform Watson, analytics and cybersecurity services, had sales of $4.15 billion, down 6 percent from a year earlier and also below expectations.
The Armonk, New York-based technology services giant, which makes over 60 percent of its revenue from outside the United States, has warned that the impact of a strengthening dollar will hit results in the second half of 2018.
IBM’s net income fell to $2.69 billion from $2.73 billion a year earlier. On a per-share basis, earnings rose to $2.94 from $2.92 due to a lower number of outstanding shares.
Excluding one-time items, IBM earned $3.42 per share, while analysts had expected $3.40. It was not immediately clear if the figures were comparable.