IBM fell the most in three months after reporting revenue that missed estimates, with sales in a key unit declining for the second consecutive period.
Revenue in the technology services and cloud platforms segment dropped 5.1 percent from the same period a year earlier, even though executives had said in April that they expected key contracts to come through in the quarter. The unit is a marker for the strength of the company’s push into newer technologies. Total revenue fell to $19.3 billion, the 21st straight quarter of year-over-year declines.
The quarterly results, released Tuesday after the close of trading, further extend Chief Executive Officer Ginni Rometty’s turnaround plan into its fifth year without significant progress. The company, once considered a bellwether for the tech industry, was the worst performer on the Dow Jones Industrial Average Wednesday. The stock tumbled as much as 4.7 percent in intraday trading, before closing down 4.2 percent to $147.53.
The shares have lost more than 11 percent of their value since the start of 2017, and have missed out on the technology-stock rally that propelled companies like Amazon and Alphabet to records.
International Business Machines Corp. has been working since before Rometty took over in 2012 to steer the company toward services and software, and she has pushed it deeper into businesses such as artificial intelligence and the cloud. Still, legacy products like computers and operating system software have been a drag on overall growth. Some investors are getting tired of waiting for the turnaround to catch on. Warren Buffett’s Berkshire Hathaway Inc. sold about a third of its investment in IBM during the first half of this year.
Several analysts cut their price targets on the company.
James Kisner, an analyst at Jefferies, said the “poor earnings quality aims to mask ongoing secular headwinds” in the software business and competitive pressures in services that may result in more investor disappointment. He rates the stock underperform and cut the price target to $125 from $154.