IBM Global Financing Q2 Receivables, Revenues & Margins Decline

Operating profit excluding some items was $US2.97 a share compared with the average analyst estimate of $US2.74

Operating profit excluding some items was $US2.97 a share compared with the average analyst estimate of $US2.74

In the second quarter previous year, IBM earned $2.95 a share on this basis. Like several other longtime IT product and service providers, the venerable company continues to take sharp financial hits in making the switchover to software and cloud services from its traditional IT hardware businesses.

Excluding one-time items, IBM earned $2.79 per share, according to Thomson Reuters I/B/E/S, beating analysts' estimates of $2.74. Analysts polled by Thomson Reuters expected revenues of $19.45 billion for the quarter.

IBM stock traded down nearly 3% premarket Wednesday.

IBM stock has dropped more than 7 percent since the beginning of this year.

However, revenue from "strategic imperatives" rose 11 percent to $34.1 billion over the past 12 months, the company said. In 2016, its cloud revenue grew by 35 percent.

Revenue from IBM's strategic imperatives of analytics, cloud, mobile, social and security was $8.8 billion, IBM said in a statement. The company seems to be holding its own in those areas, in which there is a lot of global competition from younger and less-expensive vendors.

That said, Long suggested that the July launch of IBM's z14 mainframe offering will support revenue gains in 2H17.

Long highlighted IBM's Systems segment as being a remaining driver of the company's revenue challenges in 2Q17, falling a reported 10 per cent year-to-year to $1.7 billion.

According to TBR senior analyst, Jennifer Hamel, IBM's Global Technology Services (GTS) struggled with a lull between two major contract wind-downs, announced in the prior quarter, and the ramp-up of recent large-scale cloud migration signings such as Lloyds Banking Group in the United Kingdom, as well as the ongoing shift away from low-margin IT outsourcing services.

IBM is set to open four new data centers in California, London, and Sydney, as it tries to stay competitive in the cloud business amid steadily declining overall revenue.

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