Moments ago IBM reported that EPS beat consensus expectations of $3.78 modestly, printing Q2 EPS at $3.84, which however was still a 13% drop from the $4.43 EPS in Q2 2014. However, it was not the EPS so much as the ongoing trouble at the topline which has hit IBM stock after hours and why at last check IBM was down 4% and dragging the entire Dow Jones futures lower, of which it is its second largest member.

The reason is that with Q2 revenues of $20.8 billion, this not only missed expectations, but was a plunge of 13.4% from a year ago: a drop that surpasses the biggest revenue drop recorded during the peak of the financial crisis! This is also 13 consecutive quarter of declining Y/Y revenues.

The trend is clearly not IBM's friend:

What about IBM's old faithful bag of tricks: stock buybacks? Alas, as we explained over a year ago, with IBM's net debt rising to levels that threaten its investment grade rating, the company could no longer afford to splurge, and spent a modest by its own standards $1.1 billion to repurchase its stock in Q2, fractionally lower than the amount spent in Q1 and 70% less than the $3.7 billion repurchased a year ago explained over a year ago, the great buyback scramble (if only for IBM) was coming to an end:

And with buybacks unchanged, so was CapEx, which has flatlined at just under $1 billion per quarter in the past several years.

But while IBM's income statement problems are now well-known, it is its balance sheet that investors should be paying attention to: with net debt once again slowly rising (from $30 billion to $30.3 billion in Q2), anyone hoping for a return of debt-funded stock buybacks will be sorely disappointed.

For now, whether algos are focused on the income statement or balance sheet, they don't like what they are seeing and the stock is down $7 as of this moment, dragging the entire DJIA future with it.