IBM reports higher 1Q earnings, flat revenue

Apr 17, 2012 By BARBARA ORTUTAY , AP Technology Writer
In this file photo taken Jan. 13, 2011, the IBM logo is displayed. IBM Corp., discloses its quarterly financial results Tuesday, April 17, 2012, after the market close. (AP Photo/Seth Wenig, file)

(AP) -- IBM Corp.'s stock fell after the company reported flat revenue, even as net income grew 7 percent in the first three months of the year, thanks to strong profit margins in its services business.

IBM's earnings beat Wall Street's expectations, but that is often the case with the technology bellwether. Investors appeared more worried that revenue fell shy of estimates. The stock, which recently hit its highest level ever, fell about 2 percent in extended trading Tuesday after first-quarter results came out.

IBM earned $3.07 billion, or $2.61 per share, in the January-March period. That's up from $2.86 billion, or $2.31 per share, a year earlier. Excluding special items such as acquisition costs and pension-related expenses, it earned $2.78 per share in the latest period, well above the $2.66 per share that analysts were expecting.

Revenue was flat at $24.7 billion. Software and services revenue increased, but IBM's hardware and financing segments saw a decline. The company has been focusing on its software and services offerings lately, which have higher profit margins.

Analysts, on average, were expecting revenue of $24.82 billion.

The revenue miss, though narrow, raised questions about IBM's ability to bring in enough new business to keep growing, even as it is able to squeeze out big profits from its software and services units.

IBM, which is based in Armonk, N.Y., also raised its full-year guidance. It now expects adjusted earnings of at least $15 per share. That's up from its earlier outlook of at least $14.85 per share. Analysts were expecting $14.93 per share.

IBM's long-term goal is to reach at least $20 per share in adjusted earnings by the end of 2015 - a rare example of a long-term target by a major company.

By segment, IBM's software revenue grew 5 percent to $5.6 billion and hardware revenue fell 7 percent to $3.7 billion. Technology services revenue grew 2 percent to $10 billion and business services revenue slid less than 2 percent to $4.6 billion.

IBM also said Tuesday that it is selling its retail store solutions business to Toshiba TEC Corp. for $850 million.

IBM's stock fell $3.95, or 1.9 percent, to $203.50 in after-hours trading Tuesday. During the regular session, the stock gained $4.73, or 2.3 percent, to close at $207.45. The stock hit a record high of $210.69 on April 3.

Explore further: MasterCard, Zwipe announce fingerprint-sensor card

not rated yet
add to favorites email to friend print save as pdf

Related Stories

IBM raises guidance, beats Street estimates

Jul 18, 2011

IBM Corp. raised its income guidance for the year on Monday as earnings in the latest quarter increased 8 percent because of growth in all three of its major product categories.

IBM expects earnings of $20 per share in 2015

May 12, 2010

(AP) -- IBM Corp. said Wednesday it expects to earn at least $20 per share in 2015, excluding some acquisition and pension-related costs - a forecast that reflects the growing importance of IBM's hugely profitable software ...

IBM's profit rises 9 pct, revenue growth resumes

Jan 19, 2010

(AP) -- IBM Corp. said Tuesday that it managed a 9 percent increase in profit in the last quarter as the technology company's revenue grew for the first time in a year and a half.

Hewlett-Packard reports higher 3Q earnings

Aug 19, 2011

(AP) -- Hewlett-Packard Co. reported an increase in its third-quarter net income on Thursday, but the technology company gave a lower-than-expected outlook for the current quarter and cut its outlook for ...

Recommended for you

MasterCard, Zwipe announce fingerprint-sensor card

Oct 18, 2014

On Friday, MasterCard and Oslo, Norway-based Zwipe announced the launch of a contactless payment card featuring an integrated fingerprint sensor. Say goodbye to PINs. This card, they said, is the world's ...

Apple starts iPhone 6 sales in key China market

Oct 17, 2014

Apple began selling its latest iPhone in China Friday, nearly a month after other major territories due to a licence delay by regulators, but it faces a tough battle with rivals led by Samsung in the crucial ...

Microsoft CEO launches diversity training effort

Oct 17, 2014

(AP)—Microsoft CEO Satya Nadella has again apologized to employees and announced in a company-wide memo that all workers will receive expanded training on how to foster an inclusive culture as he works to repair damage ...

Arguments made in ex-dictator's suit against game

Oct 17, 2014

(AP)—A judge has heard arguments from lawyer and former New York City Mayor Rudy Giuliani calling for the dismissal of a lawsuit filed against video game giant Activision by former Panamanian dictator Manuel Noriega.

User comments : 0