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Key takeaways

  • IBM's shares fell 5 percent in preliminary trading on Thursday.
  • The company's third-quarter revenue of 13.86 billion euros fell short of market expectations, with a year-on-year increase of only 1 percent.
  • Despite strong software sales, IBM reported a net loss of 306 million euros due to a pension settlement charge of 2.5 billion euros.

Market reaction and sales figures

IBM shares fell 5 percent in pretrading on Thursday, negatively affecting futures on the Dow Jones Industrial Average. The drop followed the company's third-quarter revenue figures, which fell short of market expectations.

Revenue for the quarter was 13.86 billion euros, up 1 percent year-on-year and growing 2 percent in constant currency. However, this figure fell short of analysts' consensus estimate of 13.95 billion euros, as reported by Visible Alpha. Both infrastructure revenues (down 7 percent) and consulting revenues (flat) contributed to this lagging performance.

Net loss and profit expectations

Despite strong software sales, IBM reported a net loss of 306 million euros due to a pension settlement charge of 2.5 billion euros. This result contrasted sharply with analysts' expectations of a profit of 1.59 billion euros.

Looking ahead, CEO Arvind Krishna predicted that fourth-quarter revenue growth will mirror third-quarter performance on a constant currency basis. He highlighted the company's thriving AI business, which is now worth more than 2.78 billion euros, representing a significant increase of more than 0.9 billion euros from the previous quarter.

Share price performance

Despite the early decline on Thursday, IBM shares have experienced a remarkable increase of more than 35 percent this year.

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