IBM earnings fall short as mainframe deals slip

Big Blue sees demand drop off at the end of the first quarter as revenue and earnings miss expectations. Other tech giants saw a similar tough finish to the quarter.

IBM

IBM's first quarter fell short of expectations as deals slipped into the second quarter. IBM's comments about a poor finish to the first quarter is becoming a common refrain among enterprise technology companies.

The company reported first-quarter earnings of $3 billion, or $2.70 a share, on revenue of $23.4 billion, down 5 percent from a year ago. Non-GAAP earnings for the first quarter were $3 a share.

IBM was expected to report first-quarter earnings of $3.05 a share on revenue of $24.6 billion.

CEO Ginni Rometty said that the company saw a strong start to the quarter, but "we did not close a number of software and mainframe transactions that have moved into the second quarter."

Rometty is making comments similar to other vendors who saw demand fall off at the end of the quarter. Both Oracle and Tibco said they saw similar drop-offs, but blamed sales execution.

IBM said that it will deliver 2013 non-GAAP earnings per share of at least $16.70. Wall Street is looking for $16.77 a share.

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IBM saw revenue decline in all regions. Revenue in the Americas was $10 billion, down 4 percent from a year ago. Revenue in Europe, the Middle East, and Africa was $7.3 billion in the first quarter, down 4 percent. Revenue in the Asia-Pacific region fell 7 percent to $5.7 billion. Even growth markets such as BRIC countries -- Brazil, Russia, India, and China -- fell 1 percent.

By division, IBM's services backlog in the first quarter was $141 billion, up 1 percent. But services revenue overall fell. Software revenue was flat. Hardware revenue fell 17 percent.

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This story originally appeared as "IBM's Q1 closes weak as software, mainframe deals slip" on ZDNet.

About the author

    Larry Dignan is editor in chief of ZDNet and editorial director of CNET's TechRepublic. He has covered the technology and financial-services industries since 1995.

     

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