IBM Profit, Sales Trail Forecast; Shares Slump
IBM Corp., the world’s No. 2 software maker, said Thursday that first-quarter profit fell short of analysts’ estimates because it had difficulty closing transactions at the end of the period. Its shares slumped.
IBM, releasing results four days early, said profit from continuing operations was 85 cents a share, missing the 90-cent average of 17 estimates in a Thomson First Call survey. Sales trailed projections in each of the three biggest businesses: software, services and hardware, IBM said.
“We did not achieve all of our goals for the quarter,” Chief Executive Sam Palmisano said.
Growth stalled as Palmisano stepped up efforts to reshape Armonk, N.Y.-based IBM around software and services such as consulting and helping clients use computers to wring costs out of functions such as payroll.
IBM shares tumbled $4.21 to $80.40 in extended trading after the report. They had shed 93 cents to $83.64 in regular trading on the New York Stock Exchange.
Net income rose to $1.4 billion, or 84 cents a share, from $1.36 billion, or 79 cents, a year earlier, IBM said. Sales rose 3.3% to $22.9 billion, lagging behind the $23.7-billion average of estimates.
“We went out today because we completed all of our work,” said IBM spokesman John Bukovinsky. “We were prepared to release the results earlier than we previously planned.”
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In other earnings news:
* PepsiCo Inc. said first-quarter earnings rose 13%, topping analysts’ estimates, because of surging demand for soft drinks in China and India and lower-fat Frito-Lay snacks in the U.S. Net income climbed to $912 million, or 53 cents a share, from $804 million, or 46 cents, a year earlier.
* New York Times Co., the third-largest newspaper publisher, said first-quarter earnings rose 90% on a gain from the sale of the company’s headquarters. Profit at the newspaper unit fell 21%. Net income increased to $111 million, or 76 cents a share, from $58.4 million, or 38 cents, a year earlier.
* Dow Jones & Co., publisher of the Wall Street Journal, said first-quarter profit fell 54% as advertising sales declined at the company’s flagship newspaper. Net income dropped to $8.18 million, or 10 cents a share, from $17.8 million, or 22 cents, a year earlier.
* IHOP Corp., which owns and franchises International House of Pancakes restaurants, said first-quarter sales at stores open at least a year rose 0.61% and that executives were “somewhat disappointed” with the performance.
