IBM Revenue: Singing the Big Blues

IBM said Wednesday that its third-quarter net income rose 6 percent, but its revenue fell and missed Wall Street's expectations by more than $1 billion. The company's stock fell in extended trading.

The Armonk, New York, computing company earned $4.04 billion, or $3.68 per share, up from $3.82 billion, or $3.33 per share, in the same quarter last year. Excluding one-time charges, the company earned $3.99 per share, above expectations of $3.96.

Revenue dropped 4 percent to $23.7 billion from $24.7 billion. That fell short of the $24.8 billion expected by analysts surveyed by FactSet. Adjusted for the effects of foreign currency exchange rates, the company said revenue fell 2 percent.

IBM is the world's largest technology-services company. Its results provide a gauge of businesses' appetite for technology spending. IBM has grown its earnings each quarter in the past decade, a streak that likely extended through the first quarter of this year.

The company's business has been stable because many of its customers sign long-term contracts that guarantee regular revenue, even when the economy is tough. It also helps that IBM no longer has a direct connection to the personal computer industry, where a sales slump has been hurting the makers of microprocessors and desktop and laptop computers.

Even so, revenue for its services business fell 3 percent. It's hurt by currency fluctuations, which can translate to fewer dollars IBM makes on overseas sales. Adjusting for that, services revenue would have been up 1 percent.

Systems and technology revenue tumbled 17 percent, and the division lost $167 million during the quarter. Software revenue rose 1 percent.

In after-market trading, IBM shares fell $11.08, or 6 percent, to $175.65. They finished the regular session up $2.07 at $186.73.

IBM said results for the July-September period were helped by lower expenses, including a steep drop in its tax rate and...

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