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IBM's shares sink after revenue falls for 20th quarter in a row

Weak demand for IT services weighed on IBM's revenue in the first quarter but the company has kept its full year expectations unchanged

IBM
IBM has been shifting its focus towards higher-growth areas

International Business Machines Corp. (NYSE:IBM) reported its 20th quarterly decline in revenue in a row as the group continued to address struggles in its legacy businesses.  

Revenue fell 2.8% to US$18.2bn in the first quarter while net income dropped 13% to US$1.8bn.

The technology services and cloud platforms business, which accounted for about 45% of total revenue, was affected by weak demand for IT services.  The division saw revenue drop 2.5% to $8.2bn.

IBM has been shifting towards higher-growth areas that it calls “strategic imperatives” such as cloud-based services, security software, data analytics and artificial intelligence.

The aim is to offset a continued slump in its legacy hardware and software businesses.

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

While the so-called “strategic imperatives” continued to grow, it failed to mitigate a decline in the company’s core operations, including the technology services and cloud platform business.

For the full year 2017, IBM reiterated its guidance for operating diluted earnings per share, excluding items, of at least US$13.80. It continues to expect free cash flow to be “relatively flat” year-on-year.

Shares fell 5.57% to US$170.05 ahead of the opening bell in the US.  

Quick facts: International Business Machines Corp.

Price: 114.82 USD

NYSE:IBM
Market: NYSE
Market Cap: $102.01 billion
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