IBM Slides as Weak Yen Crimps Earnings

NEW YORK ( TheStreet) -- IBM ( IBM) missed Wall Street's top and bottom line estimates in its first-quarter results as a weak Japanese Yen weighed down profits.

The tech giant reported revenue of $23.4 billion, down from $24.7 billion for the same period a year ago, and trailed Wall Street's forecast of $24.6 billion. Excluding items, IBM earned $3 a share, up from $2.78 a share in the prior year's quarter. Analysts surveyed by Thomson Reuters were looking for earnings of $3.05 a share.

IBM noted that a deterioration in the Yen since mid-January reduced the company's earnings by 7 cents a share. The results underwhelmed investors who sold IBM shares down 3.1% to $200.63 in extended trading.

The Armonk, N.Y.-based company did manage to griw its operating margin to 46.7%, an increase of 1 percentage point. IBM's operating net income increased to $3.4 billion, up from $3.3 billion in the same period of last year.

"In the first quarter, we grew operating net income, earnings per share and expanded operating margins but we did not achieve all of our goals in the period," said Ginni Rometty, the IBM CEO, in a statement. "Despite a solid start and good client demand we did not close a number of software and mainframe transactions that have moved into the second quarter."

The company's software revenue was flat year-over-year, or up 1% adjusted for the effects of currency, at $5.6 billion. IBM's Global Technology Services revenue decreased 4%, or 2% adjusted for currency, to $9.6 billion. The firm's hardware business experienced an even sharper decline, with revenue from its Systems and Technology segment falling 17%, or 16% adjusted for currency, to $3.1 billion.

IBM reiterated its fiscal 2013 earnings forecast of at least $16.70, excluding items. Analysts surveyed by Thomson Reuters are looking for earnings of $16.77.

--Written by James Rogers in New York.

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