IBM Slips 4% On Disappointing Q3 Revenue Of $19.3B, Lower Full-Year Profit Forecast

Today following the bell, IBM reported its third-quarter financial performance, including revenue of $19.3 billion and earnings per share of $3.34, using adjusted techniques. Analysts had expected IBM to earn an adjusted $3.30 per share, off revenue of $19.6 billion.

The company’s shares, off a fraction in regular trading, are down in after-hours trading, following its mixed earnings report. The company’s revenue miss appears to be scoring more credence from investors than its minor profit beat. The company’s profit per share, using normal accounting methods (GAAP) was a slimmer $3.02.

IBM’s adjusted profit fell 9 percent compared to the year-ago period. Its GAAP profit fell a steeper 13 percent. IBM’s revenue on an unadjusted basis fell 14 percent.

The venerable technology firm noted in its earnings report that it expects adjusted profit of $14.75 to $15.75 for the full year. That is down from its prior non-GAAP guidance during its second quarter report of $15.75 to $16.50 per share. That’s not so good.

IBM’s revenue clocked its fourteenth straight quarterly decline in the third quarter.

Not all the news was bad. The company’s annual run rate from “cloud delivered as a service,” which IBM notes is “a subset of [its] total cloud revenue” grew from $3.1 billion in the year-ago quarter, to $4.5 billion in its most recent.

IBM wrapped its quarter with debt of $39.7 billion in debt, down slightly from the start of the year. Core debt, however, rose by $2.0 billion since the start of the year to $13.7 billion since last day of 2014.

Summing quickly, IBM remains mired in a business transition. While its cloud revenues, and incomes from other future-focused products are increasing, the company is hardly done rebuilding itself. The revenue miss, the chronic top line declines, and falling profitability paint the picture of a ship that has not yet turned around.

At the same time, IBM is massively profitable, and valuable. Another 4 percent haircut to its valuation won’t change much. Expect investor angst on its call all the same.