IBM stock fell as much as 3 percent on Tuesday after the company reported earnings for its fiscal third quarter. The company will discuss the results with analysts on a conference call at 5 p.m. Eastern time.
Here’s how the company performed:
- Earnings: $3.42 per share, excluding certain items, vs. $3.40 per share as expected by analysts, according to Refinitiv.
- Revenue: $18.76 billion, vs. $19.10 billion as expected by analysts, according to Refinitiv.
Analysts expect IBM’s revenue to drop on a year-over-year basis. The company sustained five years of revenue declines before reversing the trend by showing revenue growth for three consecutive quarters.
“IBM still has a revenue growth problem,” Stifel analysts wrote in a Tuesday note. While the company saw some expansion in recent quarters from the introduction of a new mainframe computer, the fresh cycle will turn into a headwind in the short term, the analysts wrote.
Analysts at Nomura Instinet expect IBM to return to revenue growth in the second half of 2019, according to a note published on Friday.
With respect to guidance, analysts now expect IBM to post $13.80 in earnings per share for the full fiscal year, excluding certain items, according to Refinitiv.
Cloud is one of IBM’s four key strategic imperatives, or growth drivers — the others are social, mobile and analytics — and in the quarter, IBM announced cloud deals with Economical Insurance, ExxonMobil and Novis.
IBM stock is down 5 percent since the beginning of the year.
