International Business Machines last night reported a bigger-than-expected drop in first-quarter revenue, hurt by tapering demand for its mainframe computers and a stronger dollar.
The technology giant's revenue at all its main business units except cloud, which has been the centrepiece of its turnaround strategy, missed analysts' estimates.
IBM's cloud and cognitive segment, which includes analytics, cybersecurity and artificial intelligence, fell 1.5% to $5.04 billion in the quarter, but beat FactSet estimates of $4.18 billion.
"We saw good acceleration in our cloud business. We now have an improving trajectory as we move forward," IBM's chief financial officer Jim Kavanaugh said.
Under Ginni Rometty's stewardship, the company has shed many of its traditional hardware businesses and beefed up the growth areas through deals such as its $34 billion acquisition for Red Hat.
IBM returned to annual revenue growth in the last quarter of 2018, triggering expectations that its strategy was taking roots.
The company's systems segment, which houses its mainframe computer business, fell 11.5% to $1.33 billion in the reported quarter, missing FactSet estimates of $1.37 billion.
Its overall revenue slipped 4.7% to $18.18 billion in the first quarter ended March 31 and missed the average analyst estimate of $18.46 billion, according to IBES data from Refinitiv.
Its net income fell to $1.59 billion, or $1.78 per share, in the quarter ended March 31 from $1.68 billion, or $1.81 per share, a year earlier.
Excluding special items, the company said it earned $2.25 per share and beat analysts' expectation of $2.22 per share.
IBM also maintained its adjusted operating profit for 2019 to be "at least" $13.90 per share. Analysts on an average were expecting $13.91 per share.