IBM (IBM 149.80, -4.20) has given up 2.7% in pre-market despite beating earnings expectations and reaffirming its guidance.
The technology heavyweight reported above-consensus second quarter earnings of $2.97 per share on a 4.7% year-over-year decline in revenue to $19.29 billion, which was a bit shy of estimates.
Big Blue remained focused on its cloud business, which recorded revenue growth of 15.0% to $3.90 billion during the second quarter. The annual exit run rate for as-a-service revenue grew to $8.80 billion from $6.70 billion one year ago.
Looking at other Strategic Imperatives, analytics revenue grew 4.0% while mobile revenue increased 27.0%. Security revenue grew 4.0% year-over-year.
Gross margin declined to 47.2% from 49.0% one year ago. Through the first six months of 2017, gross margin was reported at 45.9%, down from 48.3% through the first six months of 2016.
Reviewing IBM's segment performance, Cognitive Solutions revenue declined 2.5% to $4.60 billion, but pre-tax income grew at double-digit rate.
Global Business Services revenue declined 3.7% to $4.10 billion, masking growth of 8.0% in the company's strategic imperatives.
Technology Services & Cloud Platforms revenue fell 5.1% to $8.40 billion, overshadowing 20.0% growth in strategic imperatives. That growth was driven by hybrid cloud services.
Systems revenue fell 10.4% to $1.70 billion while Global Financing revenue declined 2.2% to $415 million.
Looking ahead, IBM does not expect any surprises, having reaffirmed its guidance for the full year. The company expects to report earnings of at least $13.80 per share for the full year, which is ahead of current market expectations.