IBM Q3 Results Fail to Impress the Street

October 18 00:00 2011

New York, October 18 ( – IBM’s stock (NYSE: IBM) fell 3.7% to $179.70 in extended trade after closing down 2.1% on New York Stock Exchange Monday. Annex Research analyst Bob Djurdjevic said, “The Company exceeded published expectations, but the underlying expectations were even higher. Investors who have been very bullish on IBM are probably taking some profits now.”

Investors were not impressed by IBM’s Q3 results as they are used to a spectacular performance by Big Blue. Although the company’s earnings beat forecasts and increased its 2011 earnings-per-share outlook, the recent strong performances by Oracle and Accenture took the sheen off its results. Analysts are now focusing on slower expansion in key regions and businesses.

The lackluster corporate spending made even business software maker VMware Inc wary of uncertainty among some of its corporate customers in Europe even though it posted quarterly profit above expectations.

IBM, with a global clientele of information technology hardware, said that its total services signings rose to $12.3 billion in the third quarter as per expectations. Shebly Seyrafi, an analyst at FBN Securities said, “The growth rates IBM experienced in each of the regions — Americas, Europe and Asia — are all decelerating and the public sector is exhibiting no growth. I wouldn’t say we’re falling off a cliff, but there is a slowing in IT spending.”

Revenue rose 8 percent to $26.16 billion, marginally softer than the average forecast of $26.26 billion. Analysts feel that IBM’s business has a degree of resiliency to it.