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Why International Business Machines Corporation (IBM) stock is gloomy today?

International Business Machines Corporation (IBM) stock declined following the announcement of third-quarter 2021 financial results. IBM stock price saw a downtrend of 7.43% to drop at $131.36 a share as of this writing. The stock was also gloomy in the previous trade and went down by 0.06% at closing. Let’s take a closer look at this stock.


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Third Quarter 2021 Financial Results:

  • IBM stock generated $17.6 billion in revenue in the third quarter of 2021. The stock missed the analyst expectation of analysts’ expectations of $17.77 billion however, revenue increased 0.2% year-over-year.
  • IBM reported net cash of $16.1 billion from operating activities and $11.1 billion free adjusted cash flow in the third quarter of 2021. Both represent an increase of $0.3 billion over the year.
  • Total cloud revenue for the IBM stock was $27.8 billion representing a 14% increase over the year. Red hat revenue was increased by 17%. The stock reduced its debt by $7.0 billion since year-end 2020

Year to Date 2021 Results of IBM stock:

IBM stock generated 54.1 billion in revenue in the nine months ended September 30, 2021. This represents a 1.6 percent year-to-year increase as compared to $53.3 billion in the same tenure of the previous year. IBM stock recorded a 9 percent year-to-year decrease in the net income of $3.4 billion in the nine months ended September 30, 2021. Diluted earning per share decreased by 20 percent to drop at $3.77 from $4.72 per diluted share in the same period of 2020. The company reported $6.0 billion Operating (non-GAAP) net income for the nine months ended June 30, 2021. In 2020, this operating net income was $5.9 billion.

Cash Flow and Balance Sheet of IBM stock:

The company recorded $2.7 billion in net cash from operating activities in the third quarter of 2021. The free cash flow of the company was $0.6 billion including $0.6 billion cash related to the company’s structural actions and costs regarding the separation of Kyndryl. The company paid $1.5 billion to shareholders in dividends. Free cash flow was $9.2 billion for the last 12 months.  By the end of the third quarter of 2021, IBM stock had $8.4 billion cash on hand, $5.9 billion less than cash on hand by the end of the third quarter of 2020.

Segment Results of IBM stock:

The company reported $5.7 billion in revenue from Cloud & Cognitive Software. Revenues from Global Business Services reached $4.4 billion and Global Technology Services revenues were $6.2 billion in the reported quarter. Systems hardware and operating system software revenues were $1.1 billion and global Financing revenues were $220 million in the reported quarter.

Wrap Up:

Investors are responding negatively to the recent announcement of third-quarter 2021 financial results. In the last six months, IBM has lost almost 8%.

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