IBM stock was down on Wednesday after the company released a poor third quarter earnings report. The computing company announced that income rose by six percent, but its revenue fell, missing Wall Street’s expectations by over $1 billion.
Revenue for IBM dropped by four percent to $23.7 billion from $24.7 billion, according to ABC News. The numbers fell short of the $24.8 billion expected by analysts.
When adjusted for the effects of foreign currency exchange, the company still lost revenue. IBM is currently the world’s largest technology-services company. Because of this, its results are used as a gauge of the market’s appetite for tech spending.
The company has been able to grow its earnings each quarter in the past 10 years, until the first quarter of this year. Its stability is mostly due to its customers signing long-term contracts, which guarantee regular revenue, even in a tough economy. IBM also no longer has a direct connection to the personal computer industry.
However, revenue for IBM’s services fell by three percent. As a result of the poor earnings report, IBM’s stock also fell by $11.08, or six percent, to $175.65 in after-market trading.
Bloomberg notes that IBM is looking to cloud computing as a way to make up for its slowdown in the hardware business. The company generated over $1 billion in revenue from cloud products and services for the third quarter. It was the first time IBM revealed the information.
IBM added that results for the period from July through September were helped by lower expenses, including a drop in its tax rate and the absence of $408 million in charges from job cuts it logged during the same period last year. Overall, IBM stock earned $3.68 per share, up from $3.33 per share last year. Excluding one time charges, the company earned $3.99 per share.