Senior Vice President and Director of IBM Research Arvind Krishna speaks on stage during the Wired Business Conference 2016 in New York on June 16, 2016.
Brian Ach | Getty Images
IBM’s shares fell 6% in extended trading on Wednesday after the company reported that fourth-quarter revenue was below analysts’ expectations.
This is the performance of IBM:
- Earnings: $ 2.07 per share, adjusted, against $ 1.79 per share as expected by analysts, according to Refinitiv.
- Recipe: $ 20.37 billion, against $ 20.67 billion as expected by analysts, according to Refinitiv.
Revenue fell 6% on an annualized basis, the fourth consecutive quarter of declines, according to a statement. The company sought to grow in cloud computing and artificial intelligence with new CEO Arvind Krishna, but the drop in revenue also angered its predecessor, Ginni Rometty.
IBM’s cloud and cognitive software segment that includes Red Hat generated $ 6.84 billion in revenue, down about 5% year on year. This is less than FactSet’s consensus estimate of $ 7.18 billion.
The Global Technology Services unit posted revenue of $ 6.57 billion, down 6% and below FactSet’s $ 6.92 billion consensus.
Global Business Services, which includes consulting, contributed $ 4.17 billion, down about 3% and more than the $ 4.08 billion consensus.
Systems revenue of $ 2.50 billion, from sales of mainframe computers and other hardware, fell 18% and fell below the consensus estimate of $ 2.26 billion. The company is comparing it to a period when Systems revenue increased with a new mainframe.
The company’s earnings per share fell 66%, the sharpest drop in three years, in part because of a $ 2.04 billion pre-tax charge for structural stocks in the quarter.
The company did not release a formal earnings projection, but said it expects revenue growth in 2021, along with $ 11 billion to $ 12 billion in free cash flow.
During the quarter, IBM announced a split plan for its Managed Infrastructure Services division, which offers hosting for websites and web-based software, in a separate public company by the end of 2021. The plan represented the first major change to IBM as Krishna replaced Rometty as CEO in April. This division is currently within Global Technology Services.
Also in the quarter, IBM said it agreed to buy the cloud consulting services provider Nordcloud for an undisclosed amount.
Excluding the change after hours, IBM’s shares have risen about 5% since the beginning of 2021, while the S&P 500 has risen about 3% in the same period.
Executives will discuss the results with analysts on a conference call beginning at 5 pm Eastern Time.
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