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IBM shares fall in a soft profit perspective

(Reuters) – International Business Machines shares fell 2.6 percent on Friday as analysts said a "disappointing" full-year outlook showed the company would take longer to resume steady growth. .

IBM results call after US markets UU Closed on Thursday they forecast an operating profit of at least $ 13.80 per share for 2018, compared to $ 13.80 in 2017 and market expectations of $ 13.92, according to Thomson Reuters I / B / E / S.

Prospects came of the growth of the first quarterly revenues of the computer services and hardware company in six years.

"While the slight growth is modestly positive, the IBM results disappointed us greatly and we feel that IBM has a lot more work to do to change the course," Deutsche Bank analyst Sherri Scribner wrote in a note to the client.

The growth of 3.6 percent of IBM's revenues was mainly due to a 71 percent increase in sales of its new Z14 mainframe, which was launched in September, and a 27 percent growth in its business in the cloud.

Several analysts pointed to the traditionally cyclical nature of mainframe revenues, which tend to increase for 2-4 quarters after the release of a new release before falling.

But some said the growth since IBM launched its Z14 in September hinted at a different result.

Morgan Stanley analyst Katy Huberty said the security focus of the new mainframe on security attracted more new clients and workloads instead of just updates at a time when cyber attacks and chip vulnerabilities are at Top of the buyer's list of concerns.

A growth in the mainframe business could also improve IBM's margins. Adjusted gross margins of 49.5 percent of the company in the fourth quarter did not meet market expectations of 50.8 percent.

IBM has moved away from its hardware and software businesses to what it calls "strategic imperatives," which include the contribution of cloud computing, where companies use a remote network of data centers instead of their own hardware to reduce costs.

Strategic imperatives grew 14 percent in the quarter.

"Looking below the surface, however, it seems that strategic imperatives excluding systems only grew by 6 percent, largely driven by the lack of growth of cognitive solutions," said Berenberg's analyst. , Josep Bori.

"Clearly, this is not enough to offset the decline of the core business," he said.

IBM said it would continue to "maintain a high level of investment" in 2018 as it increases its cloud, mobile, cybersecurity and data analysis capabilities.

"This quarter was another important step in the right direction, with 2018 a big test year for IBM to demonstrate that the recovery story is viable, which we believe it is, albeit at a similar pace to snails," GBH Insights analyst Daniel Ives said.

Report of Supantha Mukherjee and Arjun Panchadar in Bengaluru; edition of Patrick Graham

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