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CNA
13 minutes ago
- CNA
IBM's software sales disappoint, eclipsing AI mainframe revival
IBM beat Wall Street estimates for second-quarter revenue and profit on Wednesday, but lower-than-expected sales in its mainstay software segment overshadowed a renewal in demand for the mainframe business spurred by AI upgrades. IBM's shares fell 5 per cent in extended trading, after a nearly 30 per cent rise this year driven by investors betting on prioritized software spending as businesses navigated macroeconomic uncertainty and ongoing trade negotiations. "You're seeing the stock pull back, because there's just not a lot of room to miss," said Dan Morgan, senior portfolio manager at Synovus Trust, which holds shares in IBM. "This would be more evidence that software is not growing at the pace that the street was expecting." IBM's software segment, which has traditionally been a bright spot, reported sales of $7.39 billion, missing estimates of $7.41 billion. Still, the Big Blue reported revenue of $16.98 billion for the June quarter, beating analysts' average estimate of $16.59 billion, according to data compiled by LSEG. Adjusted earnings of $2.80 per share also beat estimates. The infrastructure segment, which houses its mainframe, reported revenue of $4.14 billion, beating estimates of $3.81 billion. Sales of IBM's latest AI-specialized mainframe kicked off in June, boosting second-quarter revenue. Its "AI book of business," which combines bookings and actual sales, grew to $7.5 billion, up $1.5 billion from the previous quarter. Investors might be unimpressed, however, as the book is "cumulative, not revenue, and lacks granularity," said Michael Ashley Schulman, Running Point Capital's chief investment officer. IBM did not provide a forecast for the third quarter, after it broke tradition in April and issued a one-off quarterly outlook to give investors more clarity at a time when U.S. President Donald Trump's global tariffs were first going into effect. "That quarterly guidance was really driven by the unprecedented volatility of the foreign exchange markets" finance chief Jim Kavanaugh told Reuters. "What is different over the past 90 days — the FX world is kind of stabilized ... so we reverted back to our standard practice."
CNA
41 minutes ago
- CNA
Tesla starts 'first builds' of affordable model, posts steepest drop in quarterly revenue in over a decade
Tesla started making the "first builds" of its affordable model in June, the electric vehicle maker said on Wednesday, adding that it expects volume production in the second half of this year. Tesla did not provide an update on its full-year deliveries forecast after pulling its guidance in April, citing economic concerns. The company reported the steepest decline in quarterly revenue in more than a decade, with a 12 per cent fall, as it battles strong competition from cheaper electric vehicles and a backlash against CEO Elon Musk's political views. Tesla shares were down 1 per cent in after-hours trading. Revenue fell to $22.5 billion for the April-June quarter from $25.50 billion a year earlier. Analysts on average were expecting revenue of $22.74 billion, according to data compiled by LSEG. The company reported a second straight quarterly revenue drop despite rolling out a much-awaited refreshed version of its best-selling Model Y SUV that investors had hoped would rekindle demand. Analysts now expect the cheaper vehicle to boost sales. Tesla had said in April it would start producing the model by the end of the first half and sources had told Reuters the vehicle, a stripped-down version of its Model Y SUV, would be delayed by at least months. Tesla on Wednesday did not disclose any details on the model or how many units it had made. Much of the company's trillion-dollar valuation hangs on its bet on its robotaxi service - a small trial of which was started in Austin, Texas, last month - and developing humanoid robots. However, investors are worried about whether Musk will be able to give enough time and attention to Tesla after he locked horns with President Donald Trump by forming a new political party this month. He had promised weeks earlier that he would cut back on government work and focus on his companies. A series of high-profile executive exits, including a longtime Elon Musk confidant who oversaw sales and manufacturing in North America and Europe and left Tesla last month, is also adding to the concerns.
CNA
41 minutes ago
- CNA
Tesla starts production of more affordable model, reports steepest drop in quarterly revenue in over a decade
Tesla says it has started production of a more affordable model and expects volume production in the second half of the year. The company reported the steepest decline in quarterly revenue in more than a decade, with a 12 per cent fall, as it battles strong competition from cheaper electric vehicles and a backlash against CEO Elon Musk's political views. Revenue fell to $22.5 billion for the April-June quarter from $25.50 billion a year earlier. Analysts on average were expecting revenue of $22.74 billion, according to data compiled by LSEG. The company reported a second straight quarterly revenue drop despite rolling out a much-awaited refreshed version of its best-selling Model Y SUV that investors had hoped would rekindle demand. Much of the company's trillion dollar valuation hangs on its bet on its robotaxi service - a small trial of which was started in Austin, Texas, last month - and developing humanoid robots. However, investors are worried about whether Musk will be able to give enough time and attention to Tesla after he locked horns with President Donald Trump by forming a new political party this month. He had promised weeks earlier that he would cut back on government work and focus on his companies. A series of high-profile executive exits, including a longtime Elon Musk confidant who oversaw sales and manufacturing in North America and Europe and left Tesla last month, is also adding to the concerns.
