International Business Machines Corp. (IBM, Financial) reported its first quarter earnings results after the market’s close on April 18. Revenue for the quarter was $18.16 billion, missing estimates and decreasing -2.8% from the comparable quarter. Earnings per share were $2.38, beating estimates by three cents and increasing from $2.35 in the comparable quarter.
The majority of the company’s first quarter revenue was generated by technology services and cloud platforms with external revenue of $8.216 billion and total revenue of $8.376 billion. Revenue for technology services and cloud platforms was down -2% from the comparable quarter, but it reported an increase in pre-tax income of 166%. Gross profit margin for the business category was 38%. IBM’s technology services and cloud platforms should continue to be a leading driver of revenue and earnings for the company as it introduces and supports a range of tools for developers, specifically in the financial services sector.
Cognitive solutions reported significant pre-tax income for IBM at $1.27 billion with a gross profit margin of 77%. IBM’s ability to generate significant income from cognitive solutions with a high gross profit margin is a significant factor for the company as it leads artificial intelligence and machine learning technology development across all industries.
IBM’s stock is down -5.36% following its earnings report. It is currently trading at $160.75. It pays a quarterly dividend and has a forward dividend yield of 3.48%. Its next dividend announcement will most likely be in May. Its most recent dividend of $1.40 per share was paid on March 10.
Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway (BRK.A, Financial) (BRK.B, Financial) continues to be a top shareholder of the company with 8.54% of the outstanding shares. Other leading shareholders include Vanguard with 5.95% and State Street with 5.24%.
Disclosure: I do not own any shares of IBM.
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