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IBM Falls Despite Q3 Earnings Beat, Revenues Lag, View Soft

Shares of International Business Machines Corp.

dropped 4.84% in after-hours trading yesterday. The company reported soft third quarter 2015 results with non-GAAP earnings of $3.34 per share, beating the Zacks Consensus Estimate by a penny but declining 9.2% on a year-over-year basis.

Revenues of $19.28 billion fell short of the Zacks Consensus Estimate of $19.64 billion while declining about 13.9% on a year-over-year basis. The company reported decline across all its segments, except cloud, analytics and engagement businesses, which showed improvement.

Segment Details

Global Technology Services (GTS) revenues declined 10.2% year over year to $7.9 billion. Adjusting for the divestment of the System x business and the impact of currency translations, segment revenues improved 1% year over year.

Global Business Services revenues declined 13.1% to $4.2 billion

IBM's services backlog at the end of the quarter stood at $118 billion, up 1% on a constant currency basis.

Revenues from the Software segment were $5.1 billion, down 10% from the year-ago quarter. Revenues from IBM's key middleware products, which include WebSphere, Information Management, Tivoli, Workforce Solutions and Rational products, were down 7% from the year-ago quarter to $3.4 billion. Operating systems revenues declined 14% from the prior-year quarter to $0.4 billion.

Systems Hardware segment revenues were down 38.7% on a year-over-year basis to $1.5 billion. Revenues from System z mainframe server products increased 15% on a year-over-year basis. Revenues from...