IBM shares rise 3% post-Q2 earnings miss as investors eye prior profit warning - Yahoo Finance

What the report says

Yahoo Entertainment, carrying an Investing.com report, said IBM lowered its annual revenue growth outlook after confirming second-quarter results that missed analyst expectations. The company now expects full-year revenue to rise 4% to 5%, compared with an earlier 5% growth forecast. The report said IBM shares were slightly higher in U.S. premarket trading Thursday, following a steep selloff the prior week after the company pre-released its quarterly figures.

IBM reported second-quarter revenue of $17.2 billion, up 1% from a year earlier, and adjusted earnings of $2.93 per share. A key weakness was infrastructure revenue, which fell 7% year over year to $3.8 billion. Within that unit, sales of data-center mainframes dropped 42%, a decline the article identified as a major factor behind the reduced outlook.

The report cited CEO Arvind Krishna as saying IBM is experiencing a structural shift while arguing the company remains positioned to help customers in the artificial intelligence era. CFO James Kavanaugh said IBM continued to emphasize business fundamentals such as productivity, portfolio strength and free cash flow generation despite late-quarter revenue pressure.

IBM generated $2.5 billion in free cash flow during the quarter, $300 million below the year-earlier period, while first-half free cash flow was unchanged at $4.8 billion. The company also maintained its expectation for improved full-year pre-tax income margin expansion. The results matter because they highlight investor concerns over legacy hardware demand as IBM seeks growth from software, services and AI-related customer spending.