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IBM’s business continues to shrink

October 19, 2015, 8:39 PM UTC
IBM CEO Ginni Rometty at the 2014 Fortune Most Powerful Women summit in Laguna Niguel, Calif.
IBM CEO Ginni Rometty at the 2014 Fortune Most Powerful Women summit in Laguna Niguel, Calif.
Stuart Isett/Fortune Most Powerful Women

(Reuters) – International Business Machines reported its 14th consecutive fall in quarterly revenue and also fell short of analysts’ estimates, hurt by a strong dollar and the sale of low-margin businesses.

Shares of the world’s largest technology services company (IBM) were down 3% in after-market trading on Monday.

IBM is shifting from making hardware to cloud computing and, like established rivals such as Oracle and Microsoft, is striving to boost Internet-based software and services sales to compete with and’s web software unit.

Big Blue has been selling low-margin businesses such as cash registers, low-end servers and semiconductors to focus on high-growth areas such as security software and data analytics, besides cloud-based services.

But, the sale of these businesses and a strong dollar ate into revenue. IBM’s total revenue fell 13.9% to $19.28 billion in the third quarter ended Sept 30.

Analysts on average were expecting $19.62 billion, according to Thomson Reuters I/B/E/S, meaning the company’s revenue has now missed Wall Street’s estimates for five quarters in a row.

Armonk, New York-based IBM gets more than half its revenue from overseas. The average value of the dollar against a basket of currencies in the third quarter was about 17% higher than the same quarter last year.

Even adjusted for currency and divestitures, the company’s revenue fell 1%.

IBM’s net income 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 income rose to $2.95 billion, or $3.01 per share, from $18 million, or 2 cents per share, a year earlier.

Last year profit was hurt by non recurring pre-tax charge of $3.3 billion, net of tax for discontinued operations.

Excluding items, IBM earned $3.34 per share from continuing operations in the latest quarter, beating the average analyst estimate of a profit of $3.30 per share.

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