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IBM Q1 Profit Trumps Expectation, Outlook Weak

International Business Machines Corp. (IBM) Tuesday reported a profit for the first quarter that trumped Wall Street estimates, however, revenues fell short of expectations. Moving ahead, the company detailed a weak outlook for the full year 2019.

Armonk, New York-based IBM reported first-quarter profit of $1.59 billion or $1.78 per share, down from last year's profit of $1.68 billion or $1.81 per share.

Excluding one-time items, earnings from continuing operations were $2.25 per share, down from $2.45 per share last year. Analysts had a consensus earnings estimate of $2.22 per share for the quarter.

IBM's first-quarter revenues rose to $18.18 billion from $19.07 billion last year. Analysts polled by Thomson Reuters expected revenues of $18.51 billion for the quarter.

IBM is divesting off its low-margin and unprofitable hardware businesses to improve profitability. The company is now striving hard to make IBM a company that provides cloud computing and data analytics.

Chief Executive Ginni Rometty said, "In the first quarter, our cloud revenue growth accelerated, and we again grew in key, high-value areas in Cloud and Cognitive Software and in consulting. IBM's investments in innovative technologies coupled with our industry expertise and our commitment to trust and security position us well to help clients move to chapter two of their digital reinvention."

Total cloud revenue for over the last 12 months was $19.5 billion, up 10 percent. The annual exit run rate for as-a-service revenue increased to $11.7 billion, up 10 percent.

Looking forward to 2019, the company expects adjusted earnings of at least $12.45 per share. Analysts currently estimate earnings of $13.91 per share.

IBM closed Tuesday's trading at $145.14, up $1.24 or 0.86%, on the NYSE. The stock, however, slipped $4.54 or 3.13% in the after-hours trading.

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