International Business Machines - IBM (N: IBM), reported a decrease in revenue which exceeded the forecast for the third quarter and lowered the annual earnings outlook due to reduced demand from China and the emerging markets because of a stronger dollar.
The income of world's largest provider of technology services has been declining for the 14th consecutive quarter. After giving up low-margin businesses, the company has not yet managed to fill the vacant niche with new initiatives from a more profitable area which is cloud services.
"This is another of the many constraints that confront companies with high capitalization that adhere to traditional technologies in our ever-changing world, because more and more people are moving to cloud services," - said an analyst at FBR Capital Markets Daniel Ives.
Business in China hit the hardest: the income of IBM in the country declined by 17 % as a result of reduced number of large transactions. Sales in Brazil, Russia, India and China together have fallen by 30 %.
Total revenue from continuing operations decreased by 9 % due to the rise of dollar, which increased by 17 % in annual terms against a basket of currencies.
The total income of IBM in the third quarter fell 13.9 % to $ 19.28 billion, while analysts were expecting $ 19.62 billion.
IBM has reduced annual operating profit forecast to $ 14.75- $ 15.75 per share from $ 15.75- $ 16.50. The consensus forecast of analysts was $ 15.68, according to Thomson Reuters.
Income from operations, which the company calls "strategic imperative", including cloud and mobile computing, data analysis, social software and software security systems, rose 17 % in the third quarter.
IBM Net profit from continuing operations fell to $ 2.96 billion, or $ 3.02 per share, from $ 3.46 billion, or $ 3.46 per share a year earlier.
Consolidated net profit rose to $ 2.95 billion, or $ 3.01 per share, from $ 18 million, or 2 cents per share last year.
Excluding extra items, IBM received a third-quarter profit from continuing operations of $ 3.34 per share, beating the consensus forecast of analysts at $ 3.30 per share.