{"id":63461,"date":"2018-04-18T11:03:22","date_gmt":"2018-04-18T11:03:22","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=63461"},"modified":"2018-04-18T11:03:22","modified_gmt":"2018-04-18T11:03:22","slug":"ibm-first-quarter-margins-miss-estimates-shares-fall","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/ibm-first-quarter-margins-miss-estimates-shares-fall.html","title":{"rendered":"IBM first-quarter margins miss estimates, shares fall"},"content":{"rendered":"

IBM first-quarter margins miss estimates, shares fall<\/span><\/strong><\/span><\/h2>\n

International Business Machines Corp (IBM.N) posted profit margins that fell short of Wall Street expectations on Tuesday, a sign that its reinvention was taking time.<\/span><\/p>\n

Shares of the technology company fell 6 percent in after-hours trade even as it reported the second quarter of revenue growth after a near six-year streak of declines.<\/span><\/p>\n

IBM has in recent years shifted its focus to higher-margin businesses such as cloud computing, cybersecurity and data analytics, to counter a slowdown in its legacy hardware and software businesses, but the move is not going as fast as some shareholders had hoped.<\/span><\/p>\n

While IBM\u2019s revenue and profit beat expectations, the company\u2019s adjusted gross profit margin fell to 43.7 percent from 44.5 percent a year earlier.<\/span><\/p>\n

The company said the decline in gross margin was mostly due to \u201csignificant\u201d one-time charges.<\/span><\/p>\n

On an earnings call with analysts, IBM CFO James Kavanaugh said the company cut costs and took a $610 million charge in the first quarter, though he did not give details.<\/span><\/p>\n

This announcement follows expectations of layoffs as IBM, under its Chief Executive Ginni Rometty, tries to offset declines from its legacy businesses.<\/span><\/p>\n

\u201cThe margins were well below the expectations,\u201d Pivotal Research analyst Lou Miscioscia said.<\/span><\/p>\n

The company said it had a tax benefit of $810 million, due to changes in the U.S tax law.<\/span><\/p>\n

Wedbush Securities analyst Moshe Katri said IBM\u2019s legacy hardware business continuing to weigh on margins. \u201cIt\u2019s not necessarily about topline growth; its about profitable growth,\u201d Katri said.<\/span><\/p>\n

In addition, IBM said it continues to expect full-year adjusted earnings per share of at least $13.80, while analysts were expecting more, with the consensus at $13.83, according to Thomson Reuters I\/B\/E\/S.<\/span><\/p>\n

\u201cWe delivered exactly what we said 90 days ago. The $13.80 is an \u2018at least\u2019 and it\u2019s up 1 to 2 percent year over year,\u201d Kavanaugh told Reuters in an interview.<\/span><\/p>\n

IBM\u2019s revenue grew 5 percent to $19.07 billion in the quarter with 65 percent growth in sales from security services. Cloud revenue grew 25 percent.<\/span><\/p>\n

Net profit fell to $1.68 billion, or $1.81 per share, in the first quarter ended March 31, from $1.75 billion, or $1.85 per share, a year earlier.<\/span><\/p>\n

Excluding items, the company earned $2.45 per share, beating the analyst average estimate of $2.42.<\/span><\/p>\n

\u201cWe feel very comfortable as we enter the second quarter and the remainder of the year that we can actually deliver moving forward,\u201d Kavanaugh said.<\/span><\/p>\n

Reporting by Pushkala Aripaka and Munsif Vengattil in Bengaluru; Editing by Arun Koyyur and Cynthia Osterman<\/span><\/p>\n

Source:-https:\/\/www.reuters.com\/article\/us-ibm-results\/ibm-first-quarter-margins-miss-estimates-shares-fall-idUSKBN1HO356<\/span><\/p>\n

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