IBM 1Q net down on software, mainframe deals delay (Update)

Apr 18, 2013 by Barbara Ortutay
In this March 5, 2013, photo, made with a long exposure, visitors walk through the booths of IBM at the world's largest computer expo CeBIT in Hanover, Germany. Union Pacific Corp. reports quarterly financial results before the market opens Thursday, April 18, 2013. (AP Photo/dpa, Julian Stratenschulte)

IBM Corp.'s first-quarter net income fell 1 percent due to delays in closing several of the technology company's large software and mainframe computer deals. The results fell short of Wall Street's expectations, sending IBM's stock lower in after-hours trading.

IBM is seen as a good gauge of technology demand because it sells to major companies and governments around the world. That said, it's not immune from economic uncertainty and currency fluctuations, which showed in the quarter's results.

IBM said Thursday that it earned $3.03 billion, or $2.70 per share, in the January-March period. That's down from $3.07 billion, or $2.61 per share, in the same period a year earlier. Last year's quarter had more outstanding shares, which lowers per-share results.

Earnings excluding one-time items were $3 per share in the latest quarter, below Wall Street's expectations of $3.05 per share.

Revenue fell 5 percent, to $23.41 billion from $24.67 billion. Analysts polled by FactSet had expected revenue of $24.7 billion

"Despite a solid start and good client demand we did not close a number of software and mainframe transactions that have moved into the second quarter," said IBM CEO Ginni Rometty in a statement. "The services business performed as expected with strong profit growth and significant new business in the quarter."

Chief Financial Officer Mark Loughridge said on a conference call that weakness in the Japanese yen hurt the quarter's results. A weak yen translates to fewer dollars for IBM on sales in Japan. Adjusted for currency fluctuations, IBM said its revenue would have only declined by 3 percent for the quarter, rather than 5 percent.

IBM kept its full-year guidance intact. It still expects adjusted, per-share earnings of at least $16.70 for 2013. Analysts predict $16.77. Rometty said the company expects to close the delayed transactions and expects to benefit from investments in growth initiatives. She said IBM is also trying to improve the weaker parts of its business.

The company has been focusing on growing its software business, which is more profitable, over hardware.

Revenue from technology services declined 4 percent during the quarter, to $9.6 billion, and business services revenue fell 3 percent, to $4.5 billion. Software revenue was flat at $5.6 billion, while hardware revenue dropped 17 percent to $3.1 billion.

Shares of the Armonk, New York-based company fell $7.55, or 3.6 percent, to $199.60 in after-hours trading. Before the earnings announcement, the stock had closed down $2.52, or 1.2 percent, at $207.15.

Explore further: Monoprice takes on Amazon in trade of cheap electronics

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

Related Stories

IBM posts higher 4Q net income, beats estimates

Jan 22, 2013

IBM's fourth-quarter earnings grew 6 percent even as revenue was largely flat, as the company benefited from growing, lucrative software businesses such as Internet-based computing and data analytics.

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.

Qualcomm 3Q results beat Wall Street estimates

Jul 20, 2011

(AP) -- Wireless chip-maker Qualcomm Inc.'s results for the latest quarter beat Wall Street's expectations, and its projections for the current quarter are also above analysts' estimates.

EBay 1Q revenue grows but falls below estimates

Apr 17, 2013

EBay grew its earnings and revenue in the first quarter thanks to growth in its PayPal business and its e-commerce sites. But revenue fell shy of Wall Street's expectations, causing investors to send the company's stock lower ...

Recommended for you

Chinese tech giant Alibaba set to make a splash with US IPO

6 hours ago

The largest tech IPO of the year will come from a company that many Americans have never heard of. Alibaba Group - a Chinese e-commerce behemoth - has decided to go public in the U.S. after months of speculation that it would ...

Ex-Apple chief plans mobile phone for India

Apr 19, 2014

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

Airbnb rental site raises $450 mn

Apr 19, 2014

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.

User comments : 0

More news stories

Making graphene in your kitchen

Graphene has been touted as a wonder material—the world's thinnest substance, but super-strong. Now scientists say it is so easy to make you could produce some in your kitchen.