International Business Machines Corp posted a bigger-than-expected drop in revenue for the fifth quarter in a row and lowered its full-year profit forecast, due to a strong dollar and the sale of low-margin businesses.
Shares of the world's largest technology services company were down 4.5 percent in after-market trading on Monday.
IBM lowered its full-year 2015 operating profit forecast to $14.75-$15.75 per share from $15.75-$16.50. Analysts on average were expecting $15.68, according to Thomson Reuters I/B/E/S.
IBM is shifting from making hardware to cloud computing and, like established rivals such as Oracle Corp and Microsoft Corp, is striving to boost Internet-based software and services sales to compete with Salesforce.com Inc and Amazon.com Inc's web software unit.
In August, IBM said it would buy medical image company Merge Healthcare Inc in a $1-billion deal and combine it with its newly formed health analytics unit, which is powered by its famous Watson supercomputer.
Revenue from what the company calls "strategic imperatives," which include cloud and mobile computing, data analytics, social and security software, rose about 17 percent in the third quarter ended Sept 30.
Yet the new businesses have so far failed to make up for revenue lost to divestitures. Big Blue has been selling low-margin businesses such as cash registers, low-end servers and semiconductors to focus on high-growth areas such as security software and data analytics, besides cloud-based services.
The sale of these businesses and a strong dollar ate into revenue. IBM's total revenue fell 13.9 percent to $19.28 billion in the quarter, while analysts on average were expecting $19.62 billion. IBM's revenue has declined for 14 straight quarters.
Armonk, New York-based IBM gets more than half its revenue from overseas. The average value of the dollar against a basket of currencies in the third quarter was about 17 percent higher than the same quarter last year.
Even adjusted for currency and divestitures, the company's revenue fell 1 percent.
IBM's net income from continuing operations fell to $2.96 billion, or $3.02 per share, from $3.46 billion, or $3.46 per share, a year earlier.
Consolidated net income rose to $2.95 billion, or $3.01 per share, from $18 million, or 2 cents per share, a year earlier.
Last year profit was hurt by non recurring pre-tax charge of $3.3 billion, net of tax for discontinued operations.
Excluding items, IBM earned $3.34 per share from continuing operations in the latest quarter, beating the average analyst estimate of a profit of $3.30 per share.
Up to Monday's close, IBM's shares had fallen about 7 percent this year.
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