Technology icon IBM (IBM) reported a 13% increase in earnings Monday, but overall revenue -- which rose just 2% -- fell short of Wall Street expectations, leading investors to flee the stock in after-hours trading.
IBM reported earnings of $2.61 per share, slightly beating analyst expectations of $2.58, but revenue of $23.7 billion fell short of the $24.2 billion Wall Street had been looking for. Investors sent IBM shares down over 4% in late trading.
The disappointing performance by IBM -- which represents nearly 10% of the Dow Jones industrial average by stock weight -- is sure to weigh on Tuesday's market action.
One key area where IBM fell short was in new service signings, which fell 12% to $12.3 billion, well below the $14 billion many analysts had been hoping for.
Forex Hurts, but Emerging Economies Booming
The strength of the U.S dollar -- and the weakness of the Euro -- weighed on the IBM's top-line number, costing the company $500 million in revenue last quarter.
IBM reported strong growth in emerging economies, particularly the BRIC countries of Brazil, Russia, India and China, where growth was 16%.
Looking ahead, the company raised it overall 2010 guidance by five cents to $11.25 per share, just shy of the $11.27 that analysts had been forecasting.
In a statement, IBM Chairman and CEO Samuel J. Palmisano touted the company's performance.
"In the second quarter we again delivered double-digit earnings-per-share growth, increased margins, as well as improving constant-currency revenue performance in our ongoing software, services and hardware businesses, and in all geographies," Palmisano said.
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