What happened

Shares of IBM (NYSE:IBM) fell 9.5% on Thursday after the global technology company's third-quarter results came up short of investors' expectations.

So what

IBM's revenue inched up 0.3% year over year to $17.6 billion. Wall Street had been anticipating sales of nearly $17.8 billion. 

Even after adjusting its results to reflect the upcoming sale of its Kyndryl managed infrastructure business, IBM's revenue rose only 2.5%. The company's key cloud and cognitive software business, which includes Red Hat, delivered sales of $5.7 billion, a 2.5% increase. That, too, was slightly below analysts' estimates for revenue of $5.8 billion. 

A person is pointing to a stock chart that rises sharply and then falls.

IBM's sluggish third-quarter growth metrics disappointed investors. Image source: Getty Images.

CEO Arvind Krishna tried to reassure shareholders that better times lie ahead. "With the separation of Kyndryl early next month, IBM takes the next step in our evolution as a platform-centric hybrid cloud and AI company," Krishna said in a press release. "We continue to make progress in our software and consulting businesses, which represent our higher growth opportunities."

All told, IBM's adjusted earnings per share fell 2% to $2.52.

Now what

Still, IBM continues to produce bountiful cash flow. It generated operating and adjusted free cash flow of $16.1 billion and $11.1 billion, respectively, which were both up slightly from the prior-year quarter. The tech giant is prudently using some of that cash to pay down debt and return cash to shareowners. Its stock pays a sizable dividend, which currently yields 5.1%. So, while growth-focused investors might find IBM's stock unappealing, income seekers could find it more attractive.

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