Erstwhile tech giant IBM (NYSE:IBM) has reported its third quarter earnings, and it wasn’t pretty. IBM reported revenue of $19.28 billion, a worrying 14% Y/Y decline and badly missing consensus estimate of $19.62 billion. The company’s earnings were somewhat a mixed bag: non-GAAP EPS of $3.34 topped estimate of $3.30, but was nevertheless represented a 9% Y/Y drop. GAAP EPS of $3.02 represented an even bigger 13% Y/Y decline. This is the 14th straight quarter in which IBM’s revenue fell, and there does not seem to be an end to this decline the near future. After all, IBM revised its full-year earnings projection downwards to a lower range of $14.75-$15.75, whose midpoint is well below analysts’ consensus estimate of $15.68.
Source:IBM revenues data by amigobulls.com
IBM pinned the blame for the awful quarter on continuing currency headwinds. The company pointed that currency headwinds nicked 9 points from its top line, and its revenue would have fallen only 1% without FX headwinds. But it’s not clear whether IBM’s calculations are completely accurate because Americas’ revenue, which has minimal FX exposure, declined 10% to $9.1 billion. Asia-Pacific revenue fell a jaw-dropping 19% to $4.1 billion.
With the kind of results IBM is churning one quarter after another, Big Blue is running a very real risk of becoming a tech also-ran. IBM stock fell about 5% immediately after the earnings report to $142, just a notch above its 52-week low of $140.
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