Shares of Big Blue hit a new year-to-date low after the company underwhelmed the market with yet another quarter of falling revenues, although its performance in cloud computing was a small offset.
IBM is shifting its focus over to their Artificial Intelligence program and the IBM Cloud, which would look in to develop solutions for newer technologies. such as Blockchain as well as finding a way to reinvent the IBM mainframe so as to enable clients the ability to "encrypt all their data all the time".
The industry stalwart defied market expectations for a drop in quarterly earnings thanks to "discrete tax benefits" which boosted the company's earnings by $0.18 per share. All told, IBM reported an EPS of $2.97, above both the $2.95 it posted at this time last year and analysts' estimates for $2.74.
Total revenues on the other hand underwhelmed, coming in at $19.29bn, significantly less than last year's $20.5bn.
Yet in its results statement the company focused on the growth in their Strategic Imperatives arm, within which its cloud computing department saw sales rise. As a whole, these imperatives now make up 45% of IBM's revenues, up from 42.8% in the first quarter. Cloud revenue in particular, including cloud delivered as a service, for the quarter was $3.9bn, up 15% on last year's number. Analytics revenue of $5.1bn was up 4%.
Senior vice president and CFO Martin Schroeter said in the statement that the company had returned more than $5bn to shareholders through dividends and gross share repurchases undertaken during their first two quarters.
But this was not enough to keep the stock from falling 4.4% in morning trade - add that to the 11% the IBM are down already this year and it's safe to say shareholders would've been much happier with a different result.
With IBM set to release its new Z Series mainframe in September it is very unlikely that it will create any positive impacts towards Q3 and investors will have to wait until the end of the year when the new hardware is released.
Schroeter, when speaking of the rest of the financial year said management expected "$200m to $300m by mainframe or the services contracts, but that's about it for the third. And then obviously the rest will be in the fourth."
As of BST 1627 IBM share prices
sat at $148.52 having hit a fresh 52-week low earlier in the same session.