International Business Machines Corp. (ticker: IBM) investors are getting tired of waiting for the company’s bright future to finally arrive. On Tuesday afternoon, IBM reported its 21st consecutive quarterly revenue decline after years of heavily investing in initiatives targeting cloud computing and artificial intelligence.
[Read: How to Invest in Big Data.]
Excluding certain items, IBM reported earnings per share of $2.97, topping consensus analyst expectations of $2.74. However, IBM’s second-quarter revenue of $19.29 billion came up short of Wall Street’s $19.46 billion estimate. Revenue was down 4 percent from a year ago, prolonging IBM’s 21-quarter losing streak.
CEO Ginni Rometty is focusing on the company’s 15 percent growth in cloud revenue.
“In the second quarter, we strengthened our position as the enterprise cloud leader and added more of the world’s leading companies to the IBM cloud,” Rometty says.
IBM’s earnings beat was once again buoyed by creative tax maneuvering, a tailwind that won’t last forever.
“Following a detailed analysis, we conclude that current rates of tax are unsustainably low and that this lever could run out over time, along with other non-operational levers such as [intellectual property] sales,” Credit Suisse analyst Kulbinder Garcha wrote earlier this week. Garcha said IBM has padded its EPS by 7 percent over the past three years via tax advantages.
IBM’s core growth businesses, many of which revolve around its Watson cognitive computing system, will continue to struggle to replace is declining business tools segment, Jefferies analyst James Kisner said on Wednesday.
“The whole cognitive software market for artificial intelligence was $1.5 billion last year,” Kisner said. “As we spoke to a lot of industry contracts and customers, they all had the same sort of comment: IBM is an expensive solution.”
[See: 7 of the Best ETFs to Own in 2017.]
IBM stock initially dipped more than 4 percent on Wednesday morning after the disappointing earnings report. The stock is now trading back below $150 for the first time in 2017 and is down more than 18 percent from its 2017 high of $181.02 reached in February.
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IBM’s Revenue Losing Streak Continues originally appeared on usnews.com
