IBM Q2 Profit Tops Street

(RTTNews) - International Business Machines Corp. (IBM) Monday reported a drop in profit for the second quarter, as revenues continued to decline, hurt largely by sharp drop in hardware sales. Nevertheless, the company's quarterly earnings trumped Wall Street estimates as did revenues, reflecting strong performance of its cloud business.

Armonk, New York-based IBM's second-quarter profit dropped to $2.50 billion or $2.61 per share from $3.53 billion or 3.50 per share last year.

Excluding one-time items, earnings from continuing operations fell to $2.95 per share from $3.84 per share last year. Analysts had a consensus earnings estimate of $2.89 per share for the quarter.

IBM's second-quarter revenues declined 3 percent to $20.24 billion from $20.81 billion last year. This marks the 17th straight quarter the company has reported lower revenues. Analysts polled by Thomson Reuters expected revenues of $20.03 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 delivered double-digit revenue growth in our strategic imperatives, driven by innovations in areas such as analytics, security, cloud video services and Watson Health, all powered by the IBM Cloud and differentiated by industry."

Cognitive solutions revenues rose 3.5 percent to $4.7 billion, while global business services declined to 2.0 percent to $4.3 billion. Technology services and cloud platforms declined 0.5 percent to $8.9 billion, while systems revenues dropped 23.2 percent to $2.0 billion.

IBM said it closed 11 acquisitions during the first half of the year and invested about $2 billion in capital expenditures.

IBM closed Monday's trading at $159.86, up $0.08 or 0.05%, on the NYSE. The stock further rose $4.14 or 2.59% in the after-hours trade.'