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IBM first-quarter EPS misses Street on weak yen

The IBM logo is seen outside the company's offices in Petah Tikva, near Tel Aviv October 24, 2011. REUTERS/Nir Elias
The IBM logo is seen outside the company's offices in Petah Tikva, near Tel Aviv October 24, 2011. REUTERS/Nir Elias

(Reuters) - IBM Corp , the world's largest technology services company, reported an increase in first-quarter earnings, but missed estimates due to the depreciation of the Japanese yen.

International Business Machines Corp said on Thursday its quarterly non-GAAP income rose 3 percent to $3.4 billion, or $3.00, compared with analyst estimates of $3.05 a share, according to Thomson Reuters I/B/E/S.

The deterioration in Yen currency since mid-January reduced EPS by $0.07, a spokesman said.

Quarterly revenue dropped 5 percent to $23.4 billion compared with estimates of $24.6 billion. Revenues fell 3 percent adjusted for currency.

In addition, a number of contracts did not close as expected in the first quarter and have moved into the second quarter, the company said.

"We had solid profit performance in January, but as the quarter ended, hundreds of millions of dollars of very profitable software and systems E main frame deals fell short of the goal line," said Mark Loughridge, IBM's chief financial officer.

"This impacted the first quarter close, but the rollover of these deals positions us for a strong start in our software and main frame business in the second quarter."

Some analysts were unhappy with the results and IBM shares lost 3.4 percent from a closing price of $207.15 in extended trading following results.

"It's disappointing results," said ISI group analyst Brian Marshall.

"Clearly the business model is somewhat over-optimized. It's the first quarter in many years they did not grow EPS double digits year-over-year."

He added that investors were very focused on that double-digit earnings growth.

(Reporting by Nicola Leske.; Additional reporting by Jennifer Saba. Editing by Andre Grenon)