IBM shares open down 5 percent after weak results

Wed Jan 22, 2014 10:57am EST

1 of 2. The company logo is pictured at the IBM facility near Boulder, Colorado in this September 8, 2009 file photo.

Credit: Reuters/Rick Wilking/Files

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(Reuters) - Shares in IBM Corp opened down about 5 percent on Wednesday, a day after it missed revenue expectations, hurt by weak demand for its servers and storage equipment, particularly in growth markets such as China.

Barclays and JPMorgan also said it would be an uphill task for IBM to meet its operating earnings forecast for 2014 and 2015 without the help of taxes and gains.

"With the end of the mainframe cycle and weakness in emerging markets, coupled with pressure from cloud, revenue should remain pressured," Barclays analysts wrote in a note to clients.

IBM and rivals such as Oracle and SAP are racing to meet surging demand for web-based software products, better known as cloud computing.

IBM on Tuesday forecast that full-year 2014 adjusted profit would beat analysts' expectations and also affirmed its 2015 target for operating EPS of at least $20 per share.

Barclays lowered its price target to $173 from $180 while JPMorgan cut its price target to $175 from $179.

IBM's shares were trading down 3.5 percent at $181.73 in early trading on the New York Stock Exchange, after closing at $188.43 on Tuesday.

(Reporting By Lehar Maan in Bangalore; Editing by Savio D'Souza)

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Comments (12)
Neurochuck wrote:
IBM have been very good at “working the account” at corporate IT departments by various means, and often capturing nearly all the IT budget as prime contractor, and adding their big margin on to products and services supplied from subcontracts. Fearsome legal fineprint, “career sponsorship”, etc.
But the market with cloud computing suppliers is different – they have to directly compete for equivalent hosting services and are focused on “bang for the buck” from their technology suppliers.
Maybe IBM sell, until they “reinvent” themselves again ?

Jan 21, 2014 9:08pm EST  --  Report as abuse
UScitizentoo wrote:
Congress would rather support the Indian high tech industry by allowing jobs to flow to 60% cheaper Indian labor. IBM, the old model of employee citizens, can’t compete with a fascist congress intent on destroying America. Get used to the decline of the American middle class, you ain’t seen nothing yet.

Jan 21, 2014 10:25pm EST  --  Report as abuse
usagadfly wrote:
Buying computer equipment or services of any kind from a US company is just like banking with the IRS. The US Government will know everything there is to know about your business, even if you are not American. And they will charge you to pay for them putting their long nose in your business, in addition to helping themselves to your information.

The NSA has cost the USA its computer industry. Or more accurately a bunch of ignorant and extremely arrogant US politicians did. And they still don’t know what they did or why anyone’s customers are upset with having their information turned over without their consent. It is plain stupid to rip off your customers, and it is even worse to say it doesn’t matter. If it doesn’t matter why should the US Government have any “secrets” or “confidential” information? One set of rules for the goose and another for the gander? Sorry folks. US tech stocks are toast.

Jan 21, 2014 11:13pm EST  --  Report as abuse
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