IBM Revenues Up in 3Q, Stock Falls Anyway

Posted 10/18/2011 at 9:27am | by Paul Lilly

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There are a lot of companies that wouldn't mind trading places with IBM right now. Big Blue's numbers moved in the right direction in the third quarter of 2011, with diluted earnings per share spiking 13 percent to $3.19, revenue jumping 8 percent to $26.2 billion, and net income up 7 percent to $3.8 billion. So why is Wall Street being so skittish?

Reuters reports that shares of IBM 5 fell percent in pre-market trading today because even though all the important numbers are up, they still fell short of investor expectations, which might have been too high to begin with. The lingering concern is that we're in for a slowdown in tech spending.

If that's the case, it's news to IBM. Software and services revenues both increased in the third quarter to the tune of 13 percent and 8 percent, respectively.

"In the third quarter, we drove revenue growth, margin expansion and increased earnings as a result of our innovation-based strategy and continued investment in growth initiatives," said Samuel J. Palmisano, IBM chairman, president and chief executive officer. "Growth markets delivered outstanding revenue performance across software, hardware, and services and contributed to the company's expanded margins. We also achieved strong results in Smarter Planet, business analytics and cloud."

IBM also raised its expectations for full-year 2011 GAAP diluted earning per per share to at least $12.95 from at least $12.87, and operating (non-GAAP) diluted earnings per share to at least $13.35 from at least $13.25.