IBM’s Strategy Fails To Boost Revenue, Stock Falls 5.5%


IBM embarked on its first quarter breaking out “strategic imperatives,” as part of an effort to showcase businesses such as cognitive computing that the company believes will shape its future. Yet, overall IBM’s revenue experienced a decline compared to last year’s first quarter.

 IBM revenues dropped in the first quarter of 2016 to $18.7 billion, down from $19.6 billion during the same period a year ago. The figures make this the 16th straight quarter of declining revenue. The news came as part of the tech giant’s first-quarter revenue announcement.

The announcement marked the first time IBM broke out its financial performance by new segments to highlight what the company is calling “strategic imperatives” — high-growth new businesses that executives say are the future of the company.

IBM reported earnings per share of $2.09 for the first quarter, compared with $2.35 for the same period last year.

Bernstein Research senior analyst Toni Sacconaghi said that IBM’s guidance for earnings per share in the second quarter implied the figure would be about $2.85 — which is about 60 cents below Wall Street analyst estimates, even though the company is maintaining its guidance for the full year.

Investors on Wall Street expressed their disappointment in the revenue number and outlook with a 4% lower opening price for IBM shares on Tuesday, the morning after the first quarter earnings announcement. But some observers saw the report as a positive for the company’s longer-term goals. Krista Macomber and Stephanie Long, senior analysts with Technology Business Research Inc., say they believe that the Q1 results show IBM’s commitment to a bigger transformation.

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