IBM’s quarterly revenue missed analysts’ estimates as growth slowed in its higher-margin businesses that include cloud and artificial intelligence services, while demand for its legacy technology services fell. Shares of the Dow component were down 2 per cent at $150.78 in after-market trading on Tuesday.

IBM has in recent years shifted focus to pockets of growth across its business – areas such as cloud, cybersecurity and data analytics – to counter a slowdown in its hardware and software businesses.

Revenue from these initiatives, which IBM calls “strategic imperatives” rose 5 per cent in the second quarter ended June 30th. However, the growth was slower than the double-digit percentage increases that the businesses had posted in the past several quarters, which could add to concerns about the pace of IBM’s turnaround.

Strategic imperatives

Revenue from “strategic imperatives” rose 11 per cent to $34.1 billion over the past 12 months, the company said. Revenue in IBM’s technology services and cloud platforms business – its largest – fell 5.1 per cent to $8.41 billion. Analysts on average had expected $8.58 billion, according to financial data and analytics firm FactSet. Total revenue dipped 4.7 per cent to $19.29 billion, marking the steepest fall in in five quarters.

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IBM has not posted growth in annual revenue since 2011. Analysts on average had expected revenue of $19.46 billion.

IBM’s net income fell to $2.33 billion, from $2.50 billion, a year earlier, excluding one-time items.

–(Reuters)