International Business Machines Corp. (NYSE:IBM)’s stock price took a plunge after a disappointing third quarter performance. Adjusted EPS of $3.68 was 64 cents lower than the market consensus of $4.32. IBM’s Chief Executive Officer Ginni Rometty released a statement which attributed the information technology company’s unexpected results to the sluggish buying pattern of its clients observed last month. The team at CNBC’s pre-market news and talk show, Squawk Box, analyzed IBM’s dismal earnings report on the channel’s Earnings Alert.
Andrew Ross Sorkin, financial columnist for The New York Times, said that International Business Machines Corp. (NYSE:IBM)’s results were really bad and led to sinking stock prices.
“When you see in the headline ‘We are disappointed in our performance’ then you know that you do not need to look around too much,” he said referring to IBM Chief Ginni Rometty’s words about her company’s miserable Q3 performance.
The company reported revenue of $22.4 billion which was nearly a billion dollars less than the estimated $23.37 billion. Its weak performance is also anticipated to affect its forecast as it was forced to alter its expected operating earnings per share for 2014.
Though the statement from Rometty went on to say that International Business Machines Corp. (NYSE:IBM) did well in strategic growth areas such as cloud, security and mobile in spite of its inability to meet its revenue target, Becky Quick, Squawk Box co-anchor, mentioned that the September buying pattern did mean trouble if it had not been isolated only to IBM but observed in other companies in the market as well. “[Startling buying patterns from clients in September] is concerning if it is beyond IBM,” she said. If such behavior was observed in multiple places, this could spell trouble not just for IBM investors but for the global economy. There have been no issues observed with developed markets but emerging markets did not grow as much as expected.
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