NEW YORK — International Business Machines, the largest technology-services provider, missed analyst profit estimates for the first time since 2005 after hardware sales slowed. The shares declined as much as 5.9 percent.
Excluding some items, first-quarter profit was $3 a share, the Armonk, N.Y.-based company said Thursday in a statement. That missed the $3.05 predicted by analysts, according to data compiled by Bloomberg, marking the first shortfall in eight years. The company also said it would cut jobs and divest some businesses this year.
IBM, grappling with sluggish demand for hardware and consulting work, has been pushing into faster-growing, more lucrative markets like data analysis and mobile-phone security. For now, though, the newer areas arent offsetting the slowdown in its traditional businesses, especially as economic concerns cause customers to put off long-term technology contracts.
We did not achieve all of our goals in the period, CEO Ginni Rometty said in the statement. We did not close a number of software and mainframe transactions that have moved into the second quarter.
The poor performance of some businesses, such as certain storage products, is prompting the company to take substantial actions, Chief Financial Officer Mark Loughridge said on a conference call. The moves will include job cuts, or workforce balancing, this quarter, he said.
IBM, which has thousands of employees at its Research Triangle Park campus, is one of the regions largest employers.
First-quarter net income slid to $3.03 billion, or $2.70 a share, compared with $3.07 billion, or $2.61 a share, a year earlier, IBM said.
Its a combination of Europe, financial services and discretionary spending affecting their performance, said David Grossman, an analyst at Stifel Nicolaus & Co. in San Francisco. He advises buying IBM shares. I wasnt going into this quarter with grand expectations.
Sales slid 2.3 percent to $104.5 billion in 2012, the first decline in three years. Last years revenue was just 0.8 percent more than 2008 sales. Thats the worst four-year growth rate since the period that ended in 2002, according to data compiled by Bloomberg.
The company has focused on improving earnings instead of revenue. That effort has included moving into higher-profit businesses, selling off segments that became too competitive to be profitable, and buying back shares. IBM maintained its forecast for 2013 earnings per share of at least $16.70 on the road to its goal of $20 a share by 2015.
Rometty has said that big data services, which let customers mine vast troves of information to make better decisions, are the companys biggest priority for 2015.
In February, IBM said its data-analysis business will perform better than expected, adding $20 billion in annual revenue by 2015. That compares with an earlier forecast of $16 billion.
The latest staff reductions would continue a trend in recent years. IBM spent $803 million on workforce restructuring last year, up from $440 million in 2011. The increase was primarily due to actions outside the United States in the third quarter, according to IBMs filings.
An employee advocacy group said in February 2012 that the company had fired more than 1,000 workers in North America in a single week. IBM didnt comment on the claim.
Even with the job cuts, IBMs workforce has steadily grown, partly through acquisitions. The company had almost 467,000 workers at the end of last year, up 7.8 percent from 2011. Net income per employee, a measure of productivity, declined 2.8 percent last year, according to data compiled by Bloomberg.
IBMs earnings announcement came after the close of regular trading. The companys shares had been up 8.1 percent this year and reached a record close of $215.80 on March 14.
Staff writer David Bracken contributed.