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International Business Machines Corp. shares gained in after-hours trading Monday, after the tech giant reported another decline in revenue but produced more profit and sales than Wall Street expected amid the COVID-19 pandemic.
IBM IBM, +1.00% reported second-quarter net income of $1.36 billion, or $1.52 a share, compared with $2.5 billion, or $2.81 a share, in the year-ago period. Adjusted earnings were $2.18 a share, compared with $3.17 a share a year ago. Revenue declined to $18.12 billion from $19.16 billion in the year-ago quarter. Analysts surveyed by FactSet had forecast adjusted earnings of $2.09 a share on revenue of $17.73 billion on average.
IBM reported a decline in revenue in April, returning Big Blue to a losing streak it briefly snapped when it barely managed to eke out a slight rise in sales in the fourth quarter. IBM’s sales have declined year-over-year in all but four of the past 32 quarters.
IBM shares jumped more than 5% in after-hours activity, after gaining 1% to close the regular session at $126.35. For the year, IBM shares are down about 5%, while the Dow Jones Industrial Average DJIA, +0.03% — which counts IBM as a component — is off 6.5%, the S&P 500 index SPX, +0.84% is up less than 1%, and the tech-heavy Nasdaq Composite Index COMP, +2.51% is up 20%.
Cloud and cognitive software sales, which includes IBM’s Red Hat business, came in at $5.75 billion, compared with $5.65 billion in the year-ago quarter, while analysts had forecast $5.74 billion. Systems revenue, which includes mainframes, was $1.85 billion versus the $1.68 billion Street view.
Global technology services revenue came in at $6.32 billion while the Street expected $6.24 billion, and global business services revenue accounted for $3.89 billion in sales while the Street had forecast $3.87 billion.
Of the 18 analysts who cover IBM, three have overweight or buy ratings, 13 have hold ratings, and two have sell ratings, along with an average price target of $126.60.
