IBM stock drops after 21st consecutive revenue decline

Key Points
  • IBM reported lower revenue for the 21st consecutive quarter.
  • The company came up with $2.97 in earnings per share, above analysts' expectations.
IBM misses top line
IBM misses top line

IBM stock was down 2.5 percent on Tuesday after the company disclosed earnings for the second quarter of the year, falling short of revenue estimates but beating earnings estimates.

  • EPS: Excluding certain items, $2.97 in earnings per share vs. $2.74 in earnings per share as expected by analysts, according to Thomson Reuters.
  • Revenue: $19.29 billion vs. $19.46 billion as expected by analysts, according to Thomson Reuters.

Revenue was down year over year for the 21st quarter in a row, off by more than 4 percent. Analysts had expected that outcome, as CNBC's Deirdre Bosa reported earlier on Tuesday.

IBM reiterated its guidance of at least $13.80 in earnings per share for the full year of 2017, in line with its guidance from the first quarter. Analysts had expected guidance of $13.68 per share.

Revenue from IBM's strategic imperatives of analytics, cloud, mobile, social and security was $8.8 billion, IBM said in a statement. Strategic imperatives now contribute 45 percent of IBM's total revenue, up from 42.8 percent in the first quarter, IBM said. Cloud revenue, including cloud delivered as a service, for the quarter was $3.9 billion, up 15 percent from last year. Analytics revenue of $5.1 billion was up 4 percent.

IBM's Technology Services and Cloud Platforms division came up with $8.4 billion in revenue, down 5.1 percent year over year. The Cognitive Solutions business produced $4.6 billion in revenue, down 2.5 percent.

IBM's Global Business Services group did $4.1 billion in revenue, which was down 3.7 percent, while the Systems segment contributed $1.7 billion in revenue, down 10.4 percent.

Given that IBM raised its quarterly dividend again in April, the company has now more than doubled its quarterly dividend in 2010, chief financial officer Martin Schroeter said during the company's conference call with financial analysts.

During the second quarter, IBM announced the opening of four cloud data centers, a partnership with Lightbend, and the acquisition of Timetoact Group's XCC digital workplace hub.

Also in the quarter, CNBC reported that Facebook was looking to move WhatsApp off of IBM's cloud and onto its own in-house data center infrastructure.

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