IBM stock pops higher as earnings beat expectations but sales decline yet again

IBM stock pops higher as earnings beat expectations but sales decline yet again


International Business Machines Corp. shares gained in after-hours trading Monday, after the tech giant reported another decline in revenue but produced more profit and sales than Wall Street expected amid the COVID-19 pandemic.

IBM
IBM,
+1.00%
reported second-quarter net income of $1.36 billion, or $1.53 a share, compared with $2.5 billion, or $2.81 a share, in the year-ago period. Adjusted earnings were $2.18 a share, compared with $3.17 a share a year ago. Revenue declined to $18.12 billion from $19.16 billion in the year-ago quarter. Analysts surveyed by FactSet had forecast adjusted earnings of $2.09 a share on revenue of $17.73 billion on average.

IBM reported a decline in revenue in April, returning Big Blue to a losing streak it briefly snapped when it barely managed to eke out a slight rise in sales in the fourth quarter. IBM’s sales have declined year-over-year in all but four of the past 32 quarters.

IBM shares jumped more than 5% in after-hours activity, after gaining 1% to close the regular session at $126.35. For the year, IBM shares are down about 5%, while the Dow Jones Industrial Average
DJIA,
+0.03%
— which counts IBM as a component — is off 6.5%, the S&P 500 index
SPX,
+0.84%
is up less than 1%, and the tech-heavy Nasdaq Composite Index
COMP,
+2.51%
is up 20%.

Cloud and cognitive software sales, which includes IBM’s Red Hat business, came in at $5.75 billion, compared with $5.65 billion in the year-ago quarter, while analysts had forecast $5.74 billion. Systems revenue, which includes mainframes, was $1.85 billion versus the $1.68 billion Street view.

Global technology services revenue came in at $6.32 billion while the Street expected $6.24 billion, and global business services revenue accounted for $3.89 billion in sales while the Street had forecast $3.87 billion.

Of the 18 analysts who cover IBM, three have overweight or buy ratings, 13 have hold ratings, and two have sell ratings, along with an average price target of $126.60.


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