NEW YORK (TheStreet) -- IBM (IBM) on Wednesday reported lower first-quarter net income and a slide in revenue as a result of a one-time workforce rebalancing charge and a negative currency impact, as well as the usual hardware drag.
The company reported a 22% decline in operating net income to $2.6 billion, or $2.54 per share, and a 21% drop in GAAP net income to $2.4 billion, or $2.29 per share.
Analysts, on average, were expecting EPS of $2.54, according to Thomson One Analytics.
GAAP net income results included the impact of about $870 million in a workforce rebalancing charge and a nearly $100 million gain for the divested customer care outsourcing business.
On both a non-GAAP and GAAP-basis, gross profit margin rose, up 47.6% or 90 basis points and up 46.9% or 130 basis points respectively. Another positive is IBM reported an uptick in its services backlog, up 1% to $138 billion.
Revenue was down 4% to $22.5 billion, and down 1% adjusting for currency effects and excluding the divested customer care outsourcing business. Analysts were expecting revenue of $22.9 billion. In total dollar amounts, currency effects negatively impacted overall revenue growth by about $350 million.
As with past quarters, Systems and Technology was the main drag on overall revenue, down 23% in the first quarter. In an effort to reduce the burdens there, the company announced the sale of its industry standard server business to Lenovo in January. When the x86 divestiture to Lenovo is completed later this year, IBM will have divested of more than $6 billion in annual revenue from low-margin businesses since 2012, the start of Ginni Rometty's tenure as CEO. This comes after the company divested of some $15 billion in low-margin businesses such as PCs, displays, printers during the prior decade.