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IBM Q2 software sales weak [ITWeb](ITWeb Via Acquire Media NewsEdge) International Business Machines' software business grew less than expected in the second quarter, sparking a selloff in the company's stock yesterday, even as its revenue beat forecasts. The company's software business revenue grew 1% in the quarter to $6.5 billion, slower than forecasts of 3%, as it signed fewer contracts than expected. "We expect acceleration of software revenue to mid-single digits in the second half of 2014," IBM CFO Martin Schroeter said during a conference call after the results were released. IBM, the world's largest technology company, has been attempting to restructure its business to focus on high-end products like cloud, mobile security and big data. The company estimates software will bring in half of its profit by 2015. "This just isn't a growth story anymore, it hasn't been for a little while," said Scott Kessler, an analyst at S&P Capital. "Software is a big business no question, but 1% growth in what many have thought of as their key growth driver is worrisome," he said. IBM shares slid 1.9% in after-hours trading to $188.89 after closing at $192.49. In January, IBM sold its customer care business, which brought in approximately $1.2 billion in full-year revenue in 2013, to hardware distributor Synnex, a sale the company expects to negatively affect revenue comparisons by $300 million per quarter. Last quarter, the company saw an $870 million restructuring fee, which was largely completed and contributed to savings quarter over quarter. IBM reported free cash flow of $3 billion and buybacks of $3.7 billion, down from $8.2 billion last quarter. The company also saw growth in its strategic sectors as business analytics was up 7%, cloud revenue grew 50%, and security revenue rose 20%. Revenue in the Americas fell 1%, while revenue dropped 9% in Asia Pacific. Overall, revenue fell 2% to $24.4 billion in the second quarter, above analysts' average estimate of $24.1 billion. Net profit rose to $4.1 billion, or $4.12 per share, from $3.2 billion, or $2.91 per share, a year earlier. On an adjusted basis, the company earned $4.32 per share, beating analysts' average estimate of $4.29, according to Thomson Reuters I/B/E/S. Hardware revenue fell 11% to $3.3 billion, the seventh double-digit decline in the past eight quarters. (c) 2014 ITWeb Limited. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info). |