By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) -- IBM Corp. stood out among a slate
of tech losses Thursday as investors turned against the
computer-services giant following a disappointing quarterly
earnings report.
IBM (IBM) was off by $7.53 a share, or almost 4%, at $188.98
after the company said late Wednesday that it earned $2.38 billion,
or $2.29 a share, for its first quarter ended in March. During the
same period a year ago, IBM earned $3.03 billion, or $2.70 a share.
Revenue declined by 4% to $22.5 billion.
Excluding one-time items, IBM would have earned $2.54 a share,
which was in line with estimates of analysts surveyed by Thomson
Reuters, who had also forecast IBM to report $22.91 billion in
revenue.
The results showed IBM's lowest quarterly revenue since it
reported $21.71 billion in the first quarter of 2009. The main
source of IBM's sales drop was the company's hardware sales, which
declined 23% from a year ago to $2.4 billion. The company has been
moving more into software and cloud-based services and is in the
middle of selling its low-end server business to Lenovo Group.
Still, such moves have yet to spur meaningful sales or earnings
improvements at IBM. Analyst Brian Marshall, of ISI Group, said the
company "has a long history of proactively discarding unattractive
businesses" such as hard-disk drives, printers and PCs, but that
Chief Executive Virginia Rometty and Chief Financial Officer Martin
Schroeter need to take more dramatic action in order to transform
the company.
"Unfortunately, the pace of change in tech has only accelerated
and we believe the focus now needs to turn to building attractive
new multi-billion dollar business lines rather than shedding old
ones," Marshall said.
In spite of IBM's losses, much of the tech sector rallied, with
SanDisk Corp. (SNDK) among the top gainers. The memory and
storage-chipmaker's shares rose 10% to $83.65 after SanDisk
reported upbeat quarterly sales and earnings late Wednesday.
Twitter Inc. (TWTR) was up by 4% at $46.19 after the company
said MoPub, its new mobile-advertising product, will be able to
reach more than 1 billion devices and rival Facebook Inc.'s (FB)
user base.
Gains also came from Apple Inc. (AAPL), Netflix Inc. (NFLX),
Micron Technology Inc. (MU) and Amazon.com Inc. (AMZN).
The Nasdaq Composite Index (RIXF) reversed course from its early
losses and rose 15 points to 4,101. The Philadelphia Semiconductor
Index (SOX) was also up by 1.5%.
More must-read tech news from MarketWatch:
5 surefire ways to get taken by ID thieves
Intel pushes into mobile, but finds no profits
Subscribe to WSJ: http://online.wsj.com?mod=djnwires