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Updated from 8:18 a.m. to include analysts thoughts about the quarter in the fifth paragraph.

NEW YORK (TheStreet) –– IBM (IBM) - Get International Business Machines Corporation Report shares plunged on Monday to their lowest levels in more than a year after the company badly missed third-quarter earnings estimates and paid GlobalFoundries $1.5 billion to take its money-losing semiconductor unit off its hands.

For the third quarter, IBM earned $3.68 a share on an adjusted basis on just $22.4 billion in revenue, its lowest number since the first quarter of 2009, as nearly all of the company's business units saw a decrease in contract wins. The company's tax rate from continuing operations during the quarter was 20.8%, compared to 16.8% in the year ago quarter. Analysts surveyed by Thomson Reuters were expecting IBM to earn $4.32 a share.

"We are disappointed in our performance. We saw a marked slowdown in September in client buying behavior, and our results also point to the unprecedented pace of change in our industry. While we did not produce the results we expected to achieve, we again performed well in our strategic growth areas -- cloud, data and analytics, security, social and mobile -- where we continue to shift our business. We will accelerate this transformation," said Ginni Rometty, IBM chairman, president and CEO in a press release.

"We are executing on a clear strategy that is moving IBM to higher value, and we've taken significant actions to exit nonstrategic elements of the business. This includes the announcement that we will divest semiconductor manufacturing to focus on research and development that will differentiate our systems. We will continue to make the investments and the changes necessary to manage our business for the long term. And we remain fully committed to returning significant value to shareholders through dividends and share repurchase."

IBM has abandoned its forecast for earning $20 a share in 2015, something the company has been adamant about for years, as it focuses on transitioning its business to a cloud-computing based company, generating additional revenue from services and software. Cantor Fitzgerlad analyst Brian White noted that the company experienced a sharp slowdown in September, which impacted the quarter greatly. "IBM highlighted a slowdown during the month of September that negatively impacted transactional sales and IBM also experienced execution issues, while strength in the U.S. dollar also impacted the company's results and is expected to have more of an impact in the future," White said in a note to clients following the report.

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The company noted it had approximately $1.4 billion left from its current share buyback program and said it expects "to request an additional share repurchase authorization at the October 2014 board meeting."

Though the company missed both top and bottom line estimates, there were several highlights, particularly in the company's key areas, designed to turn the Armonk, N.Y.-based giant around. Cloud revenue rose more than 50, with public cloud revenue nearly doubling on annual basis to $2.8 billion. Business analytics revenue rose 8%, while mobile revenue more than double and security revenue rose more than 20%.

Shares of IBM were plunging, falling 7.3% to $168.69 in early Monday trading.

IBM announced that GlobalFoundries will acquire its Microelectronics OEM semiconductor business and manufacturing operations. IBM said it will transfer $1.5 billion in cash to GlobalFoundries, with IBM receiving $200 million in working capital in return. IBM took a non-recurring pretax charge of $4.7 billion for the third quarter to reflect the sale of the unit. 

-- Written by Chris Ciaccia in New York

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