International Business Machines Corp. (IBM), the biggest computer-services company, fell in early U.S. trading after missing sales estimates for the second time in nine quarters.
IBM dropped as much as 5.1 percent to $177.04 in trading before U.S. exchanges opened, after closing at $186.59 yesterday.
Sales for the third quarter climbed 7.8 percent to $26.2 billion, Armonk, New York-based IBM said yesterday. Analysts predicted $26.3 billion, the average of estimates compiled by Bloomberg. Revenue showed slowing growth in IBM’s software, hardware and services businesses.
“Because they didn’t beat, the stock’s going to trade down; the expectation is pretty high for this name,” said Josh Olson, an analyst with Edward Jones & Co. in Des Peres, Missouri, who has a “buy” rating on the stock. A slowdown in hardware revenue growth is occurring “sooner than I expected.”
Chief Executive Officer Sam Palmisano is focusing on areas such as business analytics, emerging markets and cloud computing to boost sales amid sluggish economic expansion. The U.S. economy grew at a 1.3 percent pace in the second quarter following a 0.4 percent gain in the previous three months, the weakest performance in two years.
Hardware sales growth slowed to 4 percent from 17 percent in the second quarter. Sales growth at IBM’s services business slowed to 8 percent from 10 percent, while revenue expansion at its software unit decelerated to 13 percent from 17 percent.
more at:
Bloomberg.com
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