(Bloomberg) -- IBM’s stock dropped to almost a five-year low after the company cut its profit forecast, underscoring the difficulty of trying to reinvent itself as a powerhouse in cloud computing and data analytics.The shares tumbled 5.4 percent to $141.23 at 11:07 a.m. Tuesday in New York. The stock earlier fell to $140.50, its lowest intraday price since late October 2010.
With a looming global economic slowdown and a strong dollar crimping revenue earned overseas, where International Business Machines Corp. gets the majority of sales, the company on Monday lowered its full-year profit forecast, excluding some items, to $15.25, plus or minus 50 cents. That compares with IBM’s previous outlook of $15.75 to $16.50.
The lowered projection came as IBM posted a 14 percent decline in third-quarter revenue to $19.3 billion, short of an average estimate by analysts for $19.6 billion, according to data compiled by Bloomberg. It was the 14th straight quarter of shrinking sales.
Chief Executive Officer Ginni Rometty is experiencing the same thing that other technology executives have seen as they shed legacy businesses to focus on new products that promise more regular subscription-based revenue, as seen with Adobe Systems Inc.’s three-year transition to the cloud. The difference is that IBM is much bigger, with almost 380,000 employees and an existing business that still needs care and attention.
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