IBM stock dives 9% after lackluster third-quarter results

Published on October 21, 2021 01:44 PM PDT

IBM stock dives 9% after lackluster third-quarter results — Image source: Pushish Images,Shutterstock

Highlights

IBM’s (NYSE: IBM) revenue rose by 0.3% YoY to US$17.6 billion in the quarter. The net cash from operating activities was US$2.7 billion.

Its revenue from cloud & cognitive software was US$5.7 billion, up 2.5% YoY, and cloud and data platforms grew by 10% YoY.

IBM chairman and CEO Arvind Krishna said IBM is on track to achieve its medium-term goal of mid-single digit revenue growth and “strong free cash flow generation.”

Technology company International Business Machines Corporation (NYSE: IBM) stock plunged more than 9% on Thursday, a day after lackluster third-quarter results.

The stock plunged 9.03% to US$129.08 at 2:16 pm ET.

IBM’s revenue rose marginally by 0.3% YoY to US$17.6 billion in the quarter. The net cash from operating activities was US$2.7 billion, while the free cash flow was US$0.6 billion in the quarter.

IBM chairman and CEO Arvind Krishna said the company is a step closer to its transformation as a hybrid cloud and AI company with the planned separation of Kyndryl next month.

Krishna said IBM is on track to achieve its medium-term goal of mid-single-digit revenue growth and “strong free cash flow generation.”

Third-quarter Snapshot

IBM’s revenue from cloud & cognitive software was US$5.7 billion, up 2.5% YoY. Cloud and data platforms grew by 10% YoY, while cognitive applications revenue remained flat.

In the global business services segment, revenue was US$4.4 billion, up 11.6% YoY, while the international process services revenue was up 19% YoY.

Global technology services revenue was down 4.8% to US$6.2 billion, infrastructure & cloud services revenue declined 5%, while technology support services revenue fell 4% YoY.

Systems revenue fell 11.9% to US$1.1 billion, and power systems down 24% YoY. However, its storage systems revenue grew 11%.

Global financing revenues were down 19.2% revenues to US$220 million.

Revenue for the nine months ended September 30 rose by 1.6% YoY to US$54.1 billion.

Likewise, net income for the nine months was US$3.4 billion, down 19% YoY. Diluted earnings per share declined to US$3.77 from US$4.72 per diluted share in the 2020 period.

Also Read: Crocs Inc. (CROX) stock jumps on strong Q3 results, revenue guidance

Source: Pixabay

Also Read: Southwest Airlines’ (LUV) Q3 revenue up YoY but down from 2019 levels

Stock Performance

The stock grew around 2% YTD. Its 52-week highest and lowest prices were US$152.84 and US$105.92, respectively. Its P/E ratio is 21.77, the forward P/E one year is 13.13, and the EPS is US$5.93. Its annualized dividend is US$6.56.

The New York-headquartered IBM has a market cap of around US$93.92 billion.

Bottomline

The technology sector has been growing rapidly over the past few years. The technology sector of the S&P index grew by 5.95% QTD. Investors, however, should carefully evaluate the companies before investing in the stock market.

Sanjeeb Baruah

Author

Sanjeeb Baruah - Financial Journalist
368 Posts
Sanjeeb is a senior journalist who has been in the media for nearly two decades. He wrote on various topics, from politics, international relations, business to wildlife. At Kalkine, he writes on stock markets, companies, equities, and IPOs, etc....

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