IBM Earnings Declined 7.7% In 2nd Quarter --- Drop Exceeded Forecasts; Full-Year Net Expected To Fall for Second Time
NEW YORK -- International Business Machines Corp.'s second-quarter profit fell 7.7%, making it likely the big computer maker's full-year net income will fall for the second year in a row.</br></br>Earnings -- at $2.12 a share -- were below Wall Street's expectations. IBM's report, issued at the start of trading, helped push down the overall stock market and many technology issues. In composite trading on the New York Stock Exchange yesterday, IBM closed at $139.25 a share, down $3.875.</br></br>Earnings would have fallen further except for a lower tax rate and a weaker dollar overseas this year. Securities analysts had predicted per-share net of $2.20 to $2.30. Many analysts now expect IBM's earnings to drop for all of 1986, which would give the company its first back-to-back yearly earnings decline since 1933.</br></br>"IBM is going to have a down year for sure; it would take a miracle to show otherwise," said Ulric Weil, a securities analyst in Washington. He expects IBM to have 1986 net of $10 a share, and he says, "that's not a rock-bottom number at all." In 1985, IBM's net declined slightly to $6.56 billion, or $10.67 a share, on revenue of $50.06 billion.</br></br>To match last year's earnings, IBM would have to exceed its second-half results for 1985, when profit rose 11% to $4.16 billion, or $6.76 a share.