IBM revenue falls more than expected, cuts profit forecast
By Lehar Maan and Abhirup Roy
(Reuters) - International Business Machines Corp (IBM.N: Quote) posted a bigger-than-expected drop in revenue and cut its full-year profit forecast, as a stronger U.S. dollar accentuated weakness in demand from China and emerging markets.
It was the 14th quarter in a row that IBM has posted a reduction in revenue, as the world's largest technology services company gets rid of low-margin businesses, but has so far failed to make up the shortfall with newer initiatives in the more lucrative area of cloud computing.
Shares of IBM fell 4.8 percent in after-hours trading to $141.95.
"This is another example of the massive headwinds that large-cap traditional tech stalwarts are seeing in this ever-changing environment, as more customers move to the cloud," FBR Capital Markets analyst Daniel Ives said.
China was particularly hard hit, with fewer big deals causing revenue from that country to fall 17 percent, IBM's chief financial officer said on a conference call with analysts. Sales in Brazil, Russia, India and China combined were down 30 percent.
Armonk, New York-based IBM, which gets more than half its business from overseas, said overall revenue from continuing operations was cut 9 percent by a strong U.S. dollar .DXY, which is up about 17 percent from a year ago against a basket of currencies.
The company's total revenue fell 13.9 percent to $19.28 billion in the quarter, below analysts' average forecast of $19.62 billion.
Martin Schroeter, IBM's CFO, pointed to weakness in its consulting and storage businesses for the revenue shortfall, after taking currency moves and discontinued business into account. Continued...