IBM Profit Tops View, But Sales Misses Street

(RTTNews) - International Business Machines Corp. (IBM) Tuesday reported a drop in profit for the second quarter, as the personal-computer maker reported a lower-than-expected sales. Moving ahead, the company reiterated its full year outlook.

Armonk, New York-based IBM's second-quarter profit dropped to $2.33 billion or $2.49 per share from $2.51 billion or $2.62 per share last year.

Excluding one-time items, earnings from continuing operations rose to $2.97 per share from $2.95 per share last year. Analysts had a consensus earnings estimate of $2.74 per share for the quarter.

IBM's second-quarter revenues dropped to $19.29 billion from $20.24 billion last year. This marks the 21th straight quarter the company has reported lower revenues. Analysts polled by Thomson Reuters expected revenues of $19.45 billion for the quarter.

IBM is divesting off its low-margin and unprofitable hardware businesses to improve profitability. The company is now striving hard to make IBM a company that provides cloud computing and data analytics.

Chief Executive Ginni Rometty said, "In the second quarter, we strengthened our position as the enterprise cloud leader and added more of the world's leading companies to the IBM Cloud. We continue to innovate, adding regtech capabilities to our portfolio of Watson offerings; developing solutions based on emerging technologies such as Blockchain; and reinventing the IBM mainframe by enabling clients to encrypt all data, all the time."

Second-quarter cloud revenues increased 15 percent to $3.9 billion, the company said. Revenues from analytics increased 4 percent, while revenues from mobile rose jumped 27 percent and revenues from security improved 4 percent.

Looking forward to 2017, the company continues to expect adjusted earnings of at least $13.80 per share. Analysts currently estimate earnings of $13.68 per share.

IBM closed Tuesday's trading at $154.00, up $0.99 or 0.65%, on the NYSE. The stock, however, dropped $3.00 or 1.95% in the after-hours trade.