IBM Shares Tumble on Disappointing Outlook

International Business Machines Corp. (NASDAQ: IBM) on Tuesday announced first-quarter revenue and earnings that beat Wall Street expectations. But the stock fell in early trading as the company reported narrower profit margins and slow revenue growth.

The company said revenue rose 5 percent to $19.1 billion in the first quarter, beating analysts’ estimate of $18.8 billion, according to Thomson Reuters.

Excluding certain items, the company earned $2.45 per share in the first quarter, also topping analysts’ estimate of $2.42 per share.

"In the first quarter we maintained momentum in our business, with reported revenue growth in total and across our major segments," said Ginni Rometty, IBM chairman, president and chief executive officer. "These results reinforce that our clients value our innovative technologies, our industry expertise and our commitment and actions for the responsible stewardship of their privacy and data. This is also reflected in our leadership positions in enterprise cloud, AI and security."

However, the company keeps its full-year profit forecast of $13.80 a share, falling short of analysts’ estimate of $13.83 per share.

IBM has been looking for new revenue drivers in the recent year. The company shifted its focus to business such as enterprise cloud, artificial intelligence and cybersecurity. The investments drove its adjusted gross profit margin lower.

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