Shares of IBM fell as much as 4 percent on Tuesday after the company said it generated less revenue than analysts had expected in the first quarter.
Here are the major numbers:
IBM's revenue was down almost 5% from the year-ago quarter, according to a statement. This marks the third consecutive quarter of declining revenue year over year. Previously, IBM had a streak of 22 consecutive quarters of annualized revenue declines that ended in 2017.
IBM reiterated its guidance of at least $13.90 in earnings per share, excluding certain items, for all of 2019. Analysts had been looking for $13.91 in earnings per share, excluding certain items, for the full year, according to Refinitiv.
In the first quarter IBM said it had sold its mortgage-servicing business to Mr. Cooper Group, and it said that later that this year it would wind down its business of providing working capital to certain kinds of information-technology companies.
IBM has changed its reporting structure for the first-quarter earnings report. The company no longer has a Technology Services & Cloud Platforms segment. Now it has Cloud & Cognitive Software and Global Technology Services business segments. The company's consolidated results are unchanged.
IBM's Global Technology Services segment, the biggest segment in the new reporting structure, produced revenue of $6.88 billion, down 7 percent year over year. It includes infrastructure and cloud services, along with technology support services.
The Cloud & Cognitive Software segment -- which contains cognitive applications, cloud and data platforms and transaction processing platforms -- came out to $5.04 billion in revenue, down 1.5 percent.
The Global Business Services business segment had $4.12 billion in revenue, which was basically flat. Systems revenue was $1.33 billion, down 11 percent.
The company said that Systems growth was "offset by the impact of the IBM Z product cycle dynamics." In the first quarter of 2018, IBM reported revenue growth in part thanks to companies upgrading to new mainframe technology, and Tuesday's results don't compare as well to that. Revenue from Z hardware, one portion of Systems, was down 38 percent.
Global Financing, at $406 billion, was roughly flat. IBM also reported $417 million in "other" revenue, a way to report revenue from the businesses that IBM is divesting.
IBM did not disclose how much of its total revenue from the quarter comes from strategic imperatives, which are areas the company has looked to for growth: analytics, cloud, mobile and security. In 2018 half of IBM revenue came from its strategic imperatives. IBM did say its annual exit revenue run rate for cloud delivered as a service was $11.7 billion, up 10 percent.
"When you take a look at that, that has become more and more -- I should say less and less of a relevant metric as we move forward," IBM's chief financial officer, Jim Kavanaugh, said on the company's conference call with analysts on Tuesday.
IBM's acquisition of Red Hat for $34 billion is expected to close in the second half of this year. "IBM is winning new, even cloud-native, customers before RHT," Nomura Instinet analysts led by Jeffrey Kvaal wrote in a note distributed to clients on April 9. "OpenShift [a Red Hat product] should help IBM win new customers and new workloads as enterprises begin to usher mission-critical applications from on-premise to public or private clouds."
IBM stock is up almost 28 percent since the beginning of 2019.