Shares of computing giant IBM briefly rose and then fell in after-hours trading after the company reported earnings that crushed the expectations of analysts, but kept its outlook for the year in the same place.
IBM posted per-share earnings of $2.35, well ahead of the consensus view of analysts who expected $2.09. Revenue at $18.7 billion also beat the street view of $18.3 billion. Shares initially rallied by 2 percent after hours, but fell by more than that later after the company left in place prior guidance saying it expects to earn at least $13.50 per share this year.
If shareholders had been hoping for Big Blue to bump up its guidance, CFO Martin Shroeter poured cold water on those hopes, saying on CNBC that the company plans to invest heavily in the coming year and so “it’s prudent to leave the guidance where it is.”
You might be smart to replace Shroeter’s choice of the word “investing” with the phrase “buying more companies.” IBM has announced plans to buy at least eight companies in the first four months of the year alone, and 21 since the start of 2015. The biggest of those was a $2.6 billion deal for health analytics company Truven Health, $1.3 billion for the storage company Cleversafe and $200 million for BlueWolf, a consulting firm that specializes in helping customers run Salesforce.com.
The effect of currency exchange rates caused by a strong U.S. dollar relative to global currencies like the euro and the Japanese yen lowered IBM’s overall sales by 2 percent and had a range of effects on its various segments. The Cognitive business unit, which includes sales of software for analytics and of IBM’s Watson computing business, came in at $4 billion, representing a decline of 1.7 percent, but after adjusting for currency effects, sales would have risen slightly, year on year. The unit’s gross profit margin was 82 percent.
Revenue from consulting in the Global Business Services unit declined for an eighth straight quarter versus the year-ago quarter to $4.1 billion, a decline of more than 4 percent, or 2 percent after backing out the currency effects.
Revenue in technology services and cloud platforms were $8.1 billion, down 1.5 percent year on year, but would have been nearly 2 percent higher without currency effects. Sales of IBM’s traditional computing hardware fell by nearly 22 percent to $1.7 billion.
This article originally appeared on Recode.net.