International Business Machines Corp, the world's largest technology services company, reported its worst quarterly revenue in 14 years as results from newer businesses including cloud and mobile computing failed to offset declines in its traditional businesses, sending shares down nearly 5 per cent in extended trading.
- IBM Corp posted 16th straight quarter of revenue decline
- Results from newer business fails to offset fall in traditional business
- Revenue from 'strategic imperatives' rose about 14%
Revenue fell 4.6 per cent to $18.68 billion in the first quarter, but beat analysts' average estimate of $18.29 billion.
It was the 16th straight quarter of revenue decline for IBM.
Under chief executive Ginni Rometty, IBM has been moving towards areas such as cloud-based services, security software and data analytics, while trimming its traditional hardware business by exiting low-margin businesses.
However, revenue in the company's newer businesses is failing to make up for declines in its traditional segments.
Bernstein analyst Toni Sacconaghi, in a research note before results, wrote that the falloff in IBM's traditional businesses was dwarfing the company's ability to capture new revenue.
Revenue from "strategic imperatives", which includes cloud and mobile computing, data analytics, social and security software, rose about 14 per cent in the first quarter.
But revenue from the services and hardware segments fell 4.3 per cent and 21.8 per cent, respectively, in the quarter.
Excluding items, IBM earned $2.35 per share, beating the average analyst estimate of $2.09.
The company received a $1 billion refund in the quarter that lowered its effective tax rate to a negative 95.1 per cent compared with 19.5 per cent last year.
The company maintained its full-year adjusted earnings guidance of at least $13.50 per share. Analysts on average were expecting $13.55, according to Thomson Reuters.
Up to Monday's close, IBM's shares had risen 10.83 per cent this year, compared with a 2.46 per cent gain in the S&P 500 index.
© Thomson Reuters 2016