IBM posts lowest quarterly revenue in five years at $22.5 bn

IBM Corp, the world's biggest technology services company, posted its lowest quarterly revenue in five years today, as it struggled with falling demand for its hardware and faced challenges in growth markets like China.

Shares of IBM were down as much as 4 per cent to $188.20 in after-hours trade.

Revenue for the Armonk, NY-based firm was down 4 per cent to $22.5 billion in the first quarter, lower than the average analyst estimate of $22.91 billion.

Reuters quoted Fred Hickey editor of The High-Tech Strategist newsletter, widely read by investors, as saying the company had eight revenue declines in a row. He added, they had missed so many times, it was hard to keep track of it.

The company's first-quarter revenue came in as lowest the company reported after the first quarter of 2009, when revenue stood at $21.71 billion.

Hardware revenues, including servers and systems storage, dropped 23 per cent to $2.4 billion, as sales in growth markets fell 11 per cent, led by Asia-Pacific, where reported revenue declined 12 per cent.

The computer-services provider would now need to make up more ground to end the year on an increase in profit as it shifted its business from hardware to cloud computing and data analysis.

Bloomberg quoted Moshe Katri, an analyst at Cowen & Co as saying that the big issue was IBM's legacy businesses were getting hit by multiple points. He added, that ultimately, hit the company's ability to grow earnings.

Profit fell 15 per cent from a year earlier, hurt by an $870 million charge for job cuts, according to the company's statement.

Chief executive Ginni Rometty was looking to a strong comeback in the coming quarters. In each of the past three years, first-quarter earnings had made up 18 per cent of IBM's full-year results.

Chief financial officer Martin Schroeter said yesterday in a conference call, that by the end of June, IBM would be 38 percent toward its profit goal, similar to last year which implied second-quarter earnings this year of  $4.21 to $4.39 a share, as against the average analyst estimate of $4.39.