IBM stock falls on signs of slowdown in demand

Oct 17, 2012

(AP)—IBM's stock fell more than 5 percent Wednesday, after the company reported disappointing third-quarter revenue and suggested that demand in key markets may be slowing.

Shares ended the trading session down $10.69, or 5.1 percent, at $200.31. The was released after the market closed on Tuesday.

The Armonk, New York, company blamed global economic deterioration and a drop in the value of the euro for the 5 percent drop in its revenue in the July-September period. It came to $24.7 billion, $700 million less than analysts expected.

Revenue in its region that includes Europe declined 9 percent, more than any other part of the world. The weaker euro contributed to the erosion. That's because sales made in Europe are converting into fewer U.S. dollars than a year ago.

IBM management also raised the specter of slowing demand for the company's technology-consulting services and business-software products, as become more cautious and debt-laden government agencies deal with .

Janney analyst Joseph Foresi cut his rating for the company to "Neutral" from "Buy." He said the 40 percent gain in IBM's stock since the end of 2010, to an all-time high of $211.79 earlier this month, made it too expensive given tough . He also said that the company has "execution issues" in its global technology services division, which makes up 40 percent of revenue. He has a of $209 on the shares.

Despite worries about IT demand, IBM Corp. stood behind its earnings forecast for the year, saying it will get a boost in the fourth quarter from completing several business software deals that didn't get done during the summer.

Citi analyst Jim Suva backed his "Buy" rating for IBM, saying it was "impressive" that the company maintained its profit guidance. He has a $250 price target on the stock.

Sterne Agee analyst Shaw Wu said the problems "appear short-term in nature where a few larger software deals closed after quarter end and likely pause ahead of new hardware refreshes."

Explore further: China investigating Microsoft in monopoly case

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

Related Stories

IBM's 3Q earnings flat, revenue slides 5 percent (Update)

Oct 16, 2012

IBM's revenue slipped below Wall Street's expectations in the third quarter as the technology company dealt with jittery customers and a weakening euro that undercut its results. Despite the problems posed by the wobbly economy, ...

IBM reports higher 1Q earnings, flat revenue

Apr 17, 2012

(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 indicate tech spending picking up

Apr 19, 2010

(AP) -- IBM Corp. said Monday its first-quarter profit jumped 13 percent, and the company offered evidence that corporate technology spending is rebounding after the recession.

Recommended for you

Chinese smartphone makers win as market swells

13 hours ago

Chinese smartphone makers racked up big gains as the global market for Internet-linked handsets grew to record levels in the second quarter, International Data Corp said Tuesday.

Full appeals court upholds labels on meat packages

13 hours ago

(AP)—A federal appeals court has upheld new government rules that require labels on packaged steaks, ribs and other cuts of meat to say where the animals were born, raised and slaughtered.

BlackBerry buys German anti-eavesdropping firm

14 hours ago

Canadian smartphone maker BlackBerry announced Tuesday the purchase of German voice and data encryption and anti-eavesdropping firm Secusmart, whose customers include NATO and German Chancellor Angela Merkel ...

User comments : 0