IBM Shares Plunge on Earnings Miss

International Business Machines Corp (NYSE:IBM) released earnings after the market closed on Tuesday, and results were mixed at best.

First, the good news. The company’s bottom line came in at $2.38 per share, which slightly beat analyst expectations of $2.35. The main area of strength was the cloud computing division, which grew revenue by 33% on a year-over-year basis. In addition, the company’s strategic imperatives division -- which is IBM’s venture into new technology like analytics, security, and mobility -- grew the top line by 12%.

Despite that strength, there was still plenty of weakness as well.

Overall, IBM continues to post lower and lower revenue. This quarter marked the 20th consecutive quarter the company posted a year-over-year sales decline. This quarter’s decline was approximately 3%. Revenue also came in slightly below analyst expectations.

IBM’s CFO Martin Schroeter said in a statement the company had ramped up research and development spending in the quarter, but the numbers told a different story. R&D spending was $1.53 billion, only a slight improvement on a year-over-year basis. Last year’s spending in the same quarter was $1.47 billion.

The company also warned that growth from the cloud and strategic imperatives divisions would be slower going forward.

In addition, IBM continued to reward investors with dividends and share buybacks, spending $2.6 billion on the two in the first quarter alone. The current dividend yield is 3.5%, one of the best in the tech sector.

IBM shares fell 5.75%, or $9.78, each during early trading on Wednesday morning, hitting a new 2016 low of $160.27.