IBM stock dives 9% after lackluster third-quarter results

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 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

IBM’s revenue rose marginally by 0.3% YoY to US$17.6 billion in the quarter.

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.

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