Why Did IBM Stock Tumble After an Earnings Beat?
Shares of International Business Machines (NYSE: IBM) dropped like a rock on Thursday despite reporting first-quarter results Wednesday evening that beat analyst expectations across the board. Revenue of $14.5 billion was up 2% at constant-currency measures, and non-GAAP earnings per share came in at $1.60. While earnings did decline, analysts were expecting worse. On top of beating analyst estimates, IBM maintained its full-year guidance for revenue growth and free cash flow.Despite a solid earnings report, IBM stock was down around 6.8% near market close on Thursday. Should investors buy the dip? Or was there a good reason for the sell-off?The bulk of IBM's revenue now comes from software and consulting. While software carries far higher margins, the consulting business is critical for generating business across other parts of IBM.Continue reading
Shares of International Business Machines (NYSE: IBM) dropped like a rock on Thursday despite reporting first-quarter results Wednesday evening that beat analyst expectations across the board. Revenue of $14.5 billion was up 2% at constant-currency measures, and non-GAAP earnings per share came in at $1.60. While earnings did decline, analysts were expecting worse. On top of beating analyst estimates, IBM maintained its full-year guidance for revenue growth and free cash flow.
Despite a solid earnings report, IBM stock was down around 6.8% near market close on Thursday. Should investors buy the dip? Or was there a good reason for the sell-off?
The bulk of IBM's revenue now comes from software and consulting. While software carries far higher margins, the consulting business is critical for generating business across other parts of IBM.