IBM reported a 3 percent increase in income for its first quarter of 2000, beating analysts' estimates.

Question:

IBM reported a 3 percent increase in income for its first quarter of 2000, beating analysts' estimates. But it also reported a decline in revenue. Its stock price dropped in response to the report. What explanations would you give for the drop in stock price on an earnings increase?
What is your prediction for the change in IBM's over the quarter?

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.