IBM Misses Revenue Estimates as Cloud and Services Unit Falters

IBM missed estimates for quarterly revenue, with a key business unit declining for the second consecutive time, further extending CEO Ginni Rometty’s turnaround plan, now in its fifth year without significant progress, according to Bloomberg.

Sales in the company’s technology services and cloud platforms segment declined 5.1 percent from the same period a year earlier, even though executives had said in April that they expected key contracts to come through in the quarter. Total revenue was $19.3 billion, IBM said in a statement, compared with the average analyst estimate of $19.5 billion. It marked the 21st straight quarter of year-over-year declines.

IBM has been working even since before Rometty took over in 2012 to steer the company toward services and software, and she has pushed it further into businesses such as artificial intelligence and the cloud. Still, legacy products like computers and operating system software have been a drag on overall growth. Some investors are getting tired of waiting for the turnaround to catch on.

Warren Buffett’s Berkshire Hathaway sold about a third of its investment in IBM during the first half of this year. IBM’s shares were down 7.8 percent this year through Monday. The stock fell less than 1 percent in extended trading Tuesday. Operating profit, excluding some items, was $2.97 a share, compared with the average analyst estimate of $2.74 a share. Gross operating margin was 47.2 percent.