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IBM Continues Its Falling Revenue Trend in 3Q15

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IBM fails to report revenue growth in 3Q15

The earnings season has once again begun. Later in the week, leading technology players such as SanDisk (SNDK), Citrix (CTXS), and Microsoft (MSFT) will be announcing their fiscal results. On October 19, 2015, IBM (IBM) announced its fiscal 3Q15 earnings after regular trading hours.

IBM reported revenues of $19.3 billion and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $3.34. IBM failed to beat analysts’ expectations on the revenue front. However, it managed to beat Thomson Reuters’s consensus EPS estimate of $3.30.

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For fiscal 3Q15, Estimize, a financial estimates platform, expected IBM to post revenue of $19.6 billion, while Wall Street consensus estimates hinted at $19.7 billion. On the EPS front, Estimize expected a 9.5% year-over-year (or YoY) fall in earnings for IBM. It expected IBM to post EPS of $3.38 in fiscal 3Q15, while Wall Street’s expectation was $3.33.

3Q15 marks 14 straight quarters of falling revenue for IBM

In the 2Q15 earnings series, we stated that the 2Q15 results marked 13 straight quarters of falling revenue for IBM. This trend continued in fiscal 3Q15 when IBM failed to report any revenue growth. On a year-over-year basis in fiscal 3Q15, IBM’s revenue and EPS fell by 14% and 9%, respectively.

All of IBM’s operating segments posted falls in revenue in 3Q15

The chart above shows the revenue contributions of each of IBM’s operating segments in 3Q15. All of IBM’s operating segments reported falls in fiscal 3Q15. In the later part of the series, we’ll touch in detail upon the factors that forced IBM to report these revenue falls.

You can consider investing in the PowerShares QQQ Trust (QQQ) to gain exposure to the technology sector. The ETF invests about 54% of its holdings in the sector.

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