International Business Machines Corp. posted a quarterly revenue miss and barely beat analyst expectations for earnings per share as customers put off spending on big ticket items and a stronger dollar hit the company’s top line.
IBM, which has shifted its focus to higher-margin software and services from tech products, said on Tuesday that earnings per share, excluding items, were $3.62 (U.S.), just beating average analysts’ estimates of $3.61.
Excluding a $160-million charge related to U.K. pension fees, net income fell slightly to $3.82-billion from $3.84-billion a year ago while net income, excluding acquisition costs, rose 5 per cent to $4.2-billion.
Revenue eased 5 per cent to $24.7-billion due to a negative currency impact of almost $1-billion. Wall Street had expected a decline in revenue by about 3 per cent to $25.36-billion.
“If you look at the third-quarter performance, we did start off the first two months of the quarter on a stronger trajectory than we saw for the full quarter’” chief financial officer Mark Loughridge said on a call with analysts.
He added, “a handful of deals ... fell out of the quarter” which the company had thought were secure.
The CFO also said that several large countries had disappointed, with Mexico and Australia “both down double digits.”
Global Equities Research analyst Trip Chowdhry said that some customers are holding off with purchases ahead of the U.S. presidential election, going ahead only with smaller purchases instead of replacing entire systems.
“Customers are just not opening their wallets,” he said. “That is putting pressure on IT spend.”
Revenues from IBM’s EMEA region, which includes Europe, Middle East and Africa were $7.2-billion, down 9 per cent, without adjusting for foreign exchange effects.
In the Americas, revenue declined 4 per cent to $10.4-billion while Asia-Pacific revenues rose 1 per cent to $6.5-billion.
IBM reiterated its outlook for the year, targeting earnings per share of at least $15.10.
IBM stock lost 3.31 per cent to $204 in after hours trading. It closed up 1 per cent at $211 on Tuesday.
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