IBM released third-quarter results Wednesday that missed sales forecasts by over $1 billion, as the company's hardware business took a hit from the transition to the cloud.
The hardware division, which produces servers and mainframes, lost $167 million in the third quarter, after earning $124 million a year prior. With customers increasingly relying on cloud storage from the likes of Amazon ( and others, fewer need storage infrastructure of their own. )
IBM's own cloud revenue was a bright spot, rising 70% so far this year. But the company took a hit in its Asia-Pacific sales, which fell 15% versus a year ago amid the slowdown in China and the weakening of the Japanese yen.
Overall, IBM ( reported net income of $4.4 billion, or $3.99 a share, which came in ahead of estimates. But sales, at $23.7 billion, fell short of the $24.8 billion predicted by analysts, and shares sank nearly 6% in after-hours trading. )
In spite of the struggles last quarter, IBM reaffirmed its guidance for this year and said it remains on track to meet its goal of earning at least $20 a share in 2015.