International Business Machines Corp. IBM is at least a year away from a turnaround as it dumps legacy businesses and moves into newer growth areas, an analyst said Wednesday.
Wells Fargo's Maynard Um maintained a Market Weight rating on IBM and said the company is struggling with strategy "execution" troubles along with pricing pressures and transition costs.
IBM on Tuesday posted a 4 percent decline in earnings to $5.81 a share, on revenue of $24.1 billion. Wall Street expected earnings of $5.41 a share on revenue of $24.77 billion.
The company's shares are down 20 percent in the past six months, and closed Wednesday at $152.09, down 3.1 percent.
IBM, with falling revenue in the past 11 consecutive quarters, is trying to shift to growth areas like cloud computing and data mining and away from microelectronics.
Its newly launched Z13 mainframe computer, with an ability to handle and analyze billions of mobile transactions, should help recovery for the company's hardware segment, but narrowing margins for its software segment "bear watching," Um said.
Credit Suisse's Kulbinder Garcha reiterated an Underperform rating and $125 target, and said the company faces "a painful multi-year process" of turning around results.
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