IBM Q1 Tops Street, But Shares Down On Outlook

(RTTNews) - International Business Machines Corp. (IBM) Tuesday reported a profit and revenues for the first quarter that trumped Wall Street estimates. Moving ahead, the company reiterated its full year outlook, which is below analysts' current expectations. Shares are down 5% in after-hours trading.

Armonk, New York-based IBM's first-quarter profit dropped to $1.68 billion or $1.81 per share from $1.75 billion or $1.85 per share last year.

Excluding one-time items, earnings from continuing operations rose to $2.45 per share from $2.35 per share last year. Analysts had a consensus earnings estimate of $2.41 per share for the quarter.

IBM's first-quarter revenues rose to $19.07 billion from $18.16 billion last year. Analysts polled by Thomson Reuters expected revenues of $18.82 billion for the quarter.

This is the second consecutive quarter the company has reported growth in revenues after reporting year-over-year revenue growth for the first time in more than five years in the previous quarter.

IBM is divesting off its low-margin and unprofitable hardware businesses to improve profitability. The company is now striving hard to make IBM a company that provides cloud computing and data analytics.

Chief Executive Ginni Rometty said, "In the first quarter we maintained momentum in our business, with reported revenue growth in total and across our major segments. These results reinforce that our clients value our innovative technologies, our industry expertise and our commitment and actions for the responsible stewardship of their privacy and data. This is also reflected in our leadership positions in enterprise cloud, AI and security."

Total cloud revenue over the last 12 months was $17.7 billion, up 22 percent. The annual exit run rate for as-a-service revenue increased to $10.7 billion, up 25 percent. In the first quarter of 2018, revenues from analytics increased 9 percent; revenues from mobile increased 19 percent; and revenues from security increased 65 percent.

Looking forward to 2018, the company continues to expect adjusted earnings of at least $13.80 per share. Analysts currently estimate earnings of $13.84 per share.

IBM closed Tuesday's trading at $160.91, up $3.02 or 1.91% on the NYSE. The stock, however, slipped $8.24 or 5.12% in the after-hours trading