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Total revenue fell to $22.4 billion in the third
quarter ended Sept. 30 from $23.34 billion a year earlier.
Analysts had expected revenue of $23.37 billion, according to
Thomson Reuters I/B/E/S.
The world's largest technology services company's net profit
from continuing operations fell to $3.46 billion, or $3.46 per
share, from $4.14 billion, or $3.77 per share in the same
quarter last year.
On an adjusted basis, the company earned $3.68 per share,
missing the average analyst estimate of $4.31 per share.
"We are disappointed in our performance," Chief Executive Ginni
Rometty said in a statement.
"We saw a marked slowdown in September in client buying
behavior, and our results also point to the unprecedented pace
of change in our industry," she said.
IBM's shares were down 7.3 percent at $168.73.
The company, which has been restructuring to focus on high-end
products like Cloud, mobile security and Big Data said it would
hive off its loss-making semiconductor unit to
contract-chipmaker Globalfoundries Inc.
IBM will pay Silicon Valley-based Globalfoundries $1.5 billion
in cash over the next three years to take the chip operations
off its hands, and it took a pre-tax charge of $4.7 billion in
the quarter related to the deal.
"IBM delivered soft results across the board, which speaks to
the headwinds they are seeing the field on the heels of
execution issues, secular challenges, and a mature
product/services foothold," FBR Capital Markets analyst Daniel
Ives wrote in an email.
"IBM needs to find success and growth in the cloud through
organic and acquisitive means in our opinion, otherwise there
could be some darker days ahead for the tech giant (and its
investors)," he said.
(Reporting by Anya George Tharakan in Bangalore; Editing by Don
Sebastian and Ted Kerr)
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