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IBM Third-Quarter Revenue Falls Short, Earnings A Match

IBM (IBM) reported third-quarter results late Wednesday that fell slightly short on revenue estimates but met expectations on earnings. IBM stock fell.




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The company reported adjusted earnings of $2.52 a share on revenue of $17.6 billion. Analysts expected IBM to report adjusted earnings of $2.52 a share on revenue of $17.7 billion, according to FactSet. Revenue edged up 2.5% from the year-ago period.

IBM stock dropped 4.9%, near 135, during after-hours trading on the stock market today.

The company did not provide guidance.

Earlier this month IBM approved the separation of its $19 billion managed infrastructure services business, which is currently part of the Global Technology Services segment, into a new public company, Kyndryl, effective Nov. 3. That will allow IBM to focus more on cloud computing and artificial intelligence.

IBM Stock: Business Shifts Hamper Growth

IBM is undergoing a big transition that focuses on an open, hybrid cloud platform and artificial intelligence technology. Total cloud revenue over the last 12 months reached $27.8 billion, up 14% from the comparable period a year ago.

The major shifts in business operations at IBM help to explain why growth in revenue and earnings has been a struggle. Over the past decade, IBM has invested more than $120 billion in remaking the company.

“With our increased focus and agility to better serve clients, we are confident in achieving our medium-term objectives of mid-single-digit revenue growth and strong free cash flow generation,” said CEO Arvind Krishna, in written remarks with the IBM earnings release.

IBM stock is presently not in a buy zone but keep an eye on it. Shares are forming a flat base with a 152.94 buy point. Breaking above the 50-day line and remaining above it will be key.

Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.

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