IBM profit margins shrink again in shift to cloud computing
Operating gross profit margin for Q3 misses average analysts' estimate of 50.1%
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INTERNATIONAL Business Machines Corp said profit margins shrank for the fourth quarter in a row, underscoring the technology company's challenge in shifting to more subscription-based software and cloud services.
Operating gross profit margin in the third quarter was 48 per cent, down 2.1 percentage points from the same period a year earlier. This missed the average analyst estimate of 50.1 per cent. Sales were US$19.23 billion, down 0.3 per cent from the previous year, beating the average analyst estimate of US$19 billion. While this is the closest IBM has got to revenue growth in more than four years, it's still the 18th quarter of sales declines. Profit, adjusted for certain items, was US$3.29 a share, better than the average analyst estimate of US$3.23, according to estimates compiled by Bloomberg.
