IBM Announced worse-than-expected Financial Results for the First Quarter of 2017

IBM (NYSE: IBM) announced its financial results for the Q1 of 2017, with revenue declining and missing expectations. Shares of IBM dropped sharply on Wednesday after the announcement.

According to the company, revenue for the first quarter was $18.16 billion, missing the estimates of $18.39 billion. EPS was $2.38 per share, which was above analysts’ expectations of $2.35 per share. In addition, the strategic imperatives revenue increased 12% to $7.8 billion, and cloud revenue rose 33% to $3.5 billion. The company said that it returned dividends and share repurchases of $2.6 billion in the first quarter.

“In the first quarter, both the IBM Cloud and our cognitive solutions again grew strongly, which fueled robust performance in our strategic imperatives,” Ginni Rometty, the chairman, president and chief executive officer of IBM, said in the statement. “In addition, we are developing and bringing to market emerging technologies such as blockchain and quantum, revolutionizing how enterprises will tackle complex business problems in the years ahead.”

“We continued to make investments in the first quarter to expand our cognitive and cloud platform and we increased our research and development spending,” Martin Schroeter, IBM senior vice president and chief financial officer, said in the report.

For the full-year 2017, the company expects its non-GAAP diluted earnings per share to be at least $13.8 per share, which beats estimate of $13.78 per share, and GAAP diluted earnings per share to be at least $11.95 per share. IBM also expects free cash flow to be flat year to year.

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