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Earnings Outlook: IBM investors brace for more software and services declines

IBM Corp. is expected to show a decline in fourth-quarter sales when it reports earnings after the market closes Thursday, as it continues to suffer through what has been a painful transition to a cloud-based software-as-a-service business.

The company, which has been moving its business to a software-centric model from selling hardware in the past, has surpassed top- and bottom-line expectations every quarter this fiscal year, but earnings growth has been on a downtrend for two-and-a-half years.

Also see: IBM plans to hire 25,000 workers over the next four years

IBM IBM, -0.65% may meet fiscal 2016 expectations because of its stronger-than-expected quarterly earnings this year, but Credit Suisse analyst Kulbinder Garcha warned in a note to clients this week that eroding software sales may weigh on its fiscal 2017 guidance.

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