In July, IBM (IBM) reported earnings that appeared pretty solid and beat expectations. But the details showed signs of concern for investors, and coupled with an ugly report in the preceding quarter, it looks like the future isn’t all that rosy for Big Blue.
A falloff in IBM’s hardware business weighed on both profits and revenue in April, sparking a quick 12% decline in about a week around its last report. However, shares recovered, which might have led some to write off that quarter as simply an outlier.
But it was software sales that led to a sigh of relief on Wall Street in July, not a hardware recovery. IBM earnings details revealed its Systems and Technology segment saw revenue down 12% year-over-year, prompting management itself to call hardware sales “mixed” on the quarter.
Expect more nastiness when IBM reports in the next week or two.
To be clear, it’s not just IBM swimming upstream right now. Enterprise spending has been tough for everyone from Accenture (ACN) to Oracle (ORCL), and the current government shutdown and looming debt ceiling debacle aren’t making businesses any more eager to spend big in Q4.
But any place you place the blame, it’s still a bad outlook for IBM in the months ahead.