IBM Revenue Edges Lower
October 17 2016 - 5:10PM
Dow Jones News
Overall revenue at International Business Machines Corp. edged
lower, falling for the 18th consecutive quarter, even as the
company saw some growth in newer businesses such as cloud computing
and artificial intelligence.
The Armonk, N.Y., company reported third-quarter earnings
Monday, saying that revenue for the quarter was $19.23 billion,
down 0.3%, as the company has attempted to transition into new
lines of business as its core products have become increasingly
pressured by the move to computing services delivered over the
internet.
Big Blue said third-quarter earnings fell 3.2% amid weakness in
its systems segment, which includes hardware and operating systems
software.
Excluding charges they totaled $3.29. Analysts had expected
adjusted earnings for the quarter, ended September, to be $3.23 a
share, according to Thomson Reuters.
Shares of the company fell 2.4% to $150.99 in after-hours
trading.
IBM continues to try to shift its business into growing areas
such as artificial intelligence, cloud computing, data analytics
and security as it reinvents the company.
Cloud revenue grew 2.4% to $8.75 billion during the quarter.
Those services include SoftLayer, which sells access to computing
capacity over the internet, and Bluemix, which, among other
capabilities, sells access to software over the web. The cloud
business during the quarter added new customers including Dixons
Carphone Group, JFE Steel Co., Ltd. and Vodafone India.
This year, IBM has bought 12 companies including Promontory
Financial Group and Truven Health Analytics to spur growth in
industry-specific businesses. The company has spent $5.45 billion
during the first nine months of the year, compared with $821
million during the same period a year earlier.
In financial services and health care, for example, IBM is
combining some of these acquisitions with the company's artificial
intelligence software known as Watson to create new offerings. For
example, the Promontory deal, announced September 29, will combine
the risk management and regulatory compliance consulting firm with
Watson natural language processing, machine learning and deep
learning capabilities to help financial services firms wade through
about 40,000 regulatory changes in three million pages of records
each year.
"We'll continue to run the business of consulting as we always
do, but the consultants will help train and put the wisdom and
knowledge of that understanding into Watson," said Bridget van
Kralingen, senior vice president of IBM Global Industry Platforms
in an October 18 interview. This is similar to what IBM has done
with Watson in the field of oncology, helping hospitals to better
match cancer patients to clinical trials.
Acquisitions were expected to add an estimated $360 million to
revenues during the quarter, compared with the year-earlier period,
according to Toni Sacconaghi, an analyst at Bernstein Research.
Wall Street analysts had expected revenues of $19 billion for
the quarter, according to Thomson Reuters.
For the year, the company backed its forecast for per-share
operating earnings of at least $13.50 a share.
Write to Rachael King at rachael.king@wsj.com
(END) Dow Jones Newswires
October 17, 2016 16:55 ET (20:55 GMT)
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