International Business Machines Corp. had a better-than-expected second quarter, but shares were not immediately rewarded Monday.
reported second-quarter net income of $1.39 billion, or $1.54 a share, compared with $1.47 a share in the year-ago period, while adjusted earnings, which exclude stock-based compensation expenses and other items, were $2.31 a share, up from $2.23 a share a year ago. Revenue increased to $15.54 billion from $14.22 billion in the year-ago quarter, after adjusting for discontinued operations, namely IBM’s spinoff of managed infrastructure-service business Kyndryl Holdings Inc.
Analysts surveyed by FactSet expected adjusted earnings of $2.26 a share on revenue of $15.08 billion.
Shares declined more than 3% after hours, following a 1.3% decline to close Monday’s regular session at $138.13. IBM’s stock has been positive in a rough year, rising 5.9% so far in 2022 while the Dow Jones Industrial Average — which counts IBM as a component — is down 13.9%, the S&P 500 index
is off 19% and the tech-heavy Nasdaq Composite Index
is down 27.4%.
IBM reported that software revenue grew 6.4% to $6.2 billion, consulting revenue increased 9.8% to $4.8 billion, while infrastructure revenue grew 19% to $4.2 billion.
While IBM declined to provide an earnings forecast at the beginning of the year, the company expressed optimism about the year in the previous quarter, forecasting that the loss of Russian business because of the war in Ukraine was the only real headwind it faced and it expected demand to remain strong were a “very slight recession” to occur.
Last quarter, the company also forecast revenue growth at the high end of its previously forecast model, which was the high end of the mid-single-digit range. Analysts expect full-year revenue of $60.54 billion, or a 5.6% increase from the previous year.
“With our first-half results, we continue to expect full-year revenue growth at the high end of our mid-single-digit model,” IBM Chief Executive Arvind Krishna said in a statement.