Shares of International Business Machines (IBM) hit a five-year low yesterday.

It comes a day after the company’s lacklustre results and forecast showed that it would be a while before its focus on lucrative cloud computing business makes up for revenue lost to divestitures.

At least nine brokerages lowered their price target on IBM’s stock after the company posted a bigger-than-expected drop in third-quarter revenue and cut its full-year profit forecast.

Decline

IBM shares fell as much as 5.8 per cent to $140.51. The last time the stock declined more than 5 per cent in a session was in July after the company’s disappointing second-quarter results.

At least six of 19 analysts covering the stock have a price target that is less than the stock’s low of the day.

Analysts’ median price target is $150, according to Thomson Reuters data.

Cash registers

It was the 14th quarter in a row that IBM has posted a reduction in revenue as it gets rid of low-margin businesses such as cash registers, low-end servers and semi-conductors to focus on high-growth areas such as security software, data analytics and cloud-based services.

IBM chief executive Virginia Rometty (left) shrugged off the weak results, stressing that the company’s shift to a new business model would take time to execute.

Airlines

“We run the banks of the world, the airlines,” she said.

"I make no apologies for that – those are important businesses, and we run them well," Ms Rometty said at a conference hosted by the Wall Street Journal in Laguna Beach, California, yesterday.

Analysts expect that IBM will post an increase in quarterly revenue only in the third quarter of next fiscal year, according to Thomson Reuters. – (Reuters)