(Corrects paragraph 7 to say all businesses except cloud “missed”, not “beat” estimates)
April 16 (Reuters) - International Business Machines Corp reported a bigger-than-expected drop in quarterly revenue on Tuesday, an indication that its efforts to pivot to newer businesses such as cloud, analytics, software and services remained patchy at best.
Shares of the company fell about 2.85 percent to $141 in trading after the bell.
Under Ginni Rommetty’s stewardship, the company has shed many of its traditional hardware businesses and beefed up the growth areas through deals such as its $34 billion deal for Red Hat Inc, by far the company’s biggest acquisition.
The company returned to annual revenue growth after seven years in the last quarter of 2018, triggering expectations that its strategy was taking roots.
Shares of the technology services giant have gained about 18 percent since Jan.22, when it reported its fourth-quarter results.
The company’s revenue slipped 4.7 percent to $18.18 billion in the first quarter ended March 31 and missed analysts’ average estimate of $18.46 billion, according to IBES data from Refinitiv.
Revenue from four of its business segments fell year-over-year and all of them except the cloud unit missed FactSet revenue estimates.
Its cloud and cognitive segment, which includes analytics, cybersecurity and artificial intelligence, fell 1.5 percent to $5.04 billion, but beat FactSet estimates of $4.18 billion.
“We see limited upside to revenues due to currency headwinds, tough comps from the mainframe cycle, and a potential pullforward of software revenues into Q4,” said Toni Sacconaghi, analyst from Bernstein.
The company’s net income fell $1.59 billion, or $1.78 per share, compared with $1.68 billion, or $1.81 per share, a year earlier
Excluding special items, the company earned $2.25 per share and beat analysts’ expectation of $2.22 per share. (Reporting by Sayanti Chakraborty in Bengaluru; Editing by Arun Koyyur)