Shares of IBM fell late Wednesday after the computer giant reported first-quarter earnings that were better than expected, with revenue slightly below estimates. The company also announced plans for a $6.4 billion acquisition of a cloud software company Hashi Corp (HCP), a deal that was reported as close to completion by the Wall Street Journal a day earlier.
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In a earning publication published late Wednesday, IBM (IBM) said it earned an adjusted $1.68 per share on revenue of $14.46 billion for the quarter ended in March. On average, analysts forecast that the Armonk, New York-based company would post adjusted earnings of $1.60 per share on revenue of $14.53 billion, according to FactSet.
For the same period a year earlier, IBM made posted an adjusted profit of $1.36 per share on revenue of $14.25 billion.
Meanwhile, the tech giant announced a plan to acquire HashiCorp for $6.4 billion, or $35 per share. The acquisition will create “a comprehensive end-to-end hybrid cloud platform for the AI era,” according to IBM’s press release. HashiCorp stock had a market cap of about $5 billion before the Wall Street Journal report sent it higher on Tuesday.
In today’s stock market, IBM shares fell more than 8% to 167.63 after hours.
IBM Outlook for 2024
IBM confirmed its previous full-year guidance for mid-single-digit revenue growth through 2024 and free cash flow of $12 billion.
The company’s shares have been helped in recent months by progress in offering AI services. The company again emphasized its AI momentum on Wednesday.
“We continue to capitalize on the excitement and demand for business AI from our customers,” IBM CEO Arvind Krishna said in the press release. “Our Watsonx and Generative AI businesses once again showed strong momentum, growing quarter over quarter, and have now been eclipsed one billion dollars since we launched Watsonx in mid-2023.”
IBM’s total revenue rose about 1% year over year in the first quarter. Revenue from its software business grew 5.5% year over year to $5.9 billion, consulting revenues were flat at $5.2 billion and revenues from its infrastructure business fell just under 1% to $3.1 billion dollars, according to IBM.
IBM Stock: Technical Reviews
Ahead of earnings reports, IBM shares gained 1% on Wednesday trade. Before Wednesday’s after-hours action, IBM shares were up 13% this year and 46% in the past 12 months.
The report features IBM shares had an IBD Composite Rating of 81 out of a possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a composite rating of 90 or higher.
Furthermore, the IBD Relative Strength Rating of IBM stock was 86 from 99.
Ahead of the earnings report, IBD MarketSurge showed that IBM stock had formed a flat base, with a potential buy point of 199.18.
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