IBM's financial results for the second quarter of 2010 have failed to live-up to Wall Street expectations.
The company reported steady growth in software sales and a net rise in income of 9 per cent to $3.39 billion, or $2.65 per share. However, revenue failed to match the $24.2 billion estimated by analysts, falling short at $23.7 billion.
The company said that the low revenue, which resulted in the direct loss of $500 million, was due to the unstable currency rates, something that IBM claims analysts don't allow for in their forecasts.
In a further disappointment to investors, IBM also reported a 12 per cent fall in service contracts to $12.3 billion. Service contracts are a major revenue stream for any IT company. Outsourced service contracts also fell by 19 per cent.
The company blamed the shortfall on an unusually high number of contract extensions being signed last year, as customers re-negotiated deals during the recession.
IBM reported a 14 per cent rise in business analytics software sales, and information system software also rose by 7 per cent.