SVP and Director at IBM Research Arvind Krishna speak on stage during the Wired Business Conference 2016 in New York on June 16, 2016.
Brian Oh | Getty Images
IBM shares fell 7% in expanded trading on Wednesday after the company reported fourth-quarter revenue that fell short of analysts’ expectations.
This is how IBM behaved:
- Merits: Adjusted for $ 2.07 per share versus $ 1.79 per share as analysts expected, Refinitiv said.
- Revenue: According to Refinitiv, $ 20.37 billion versus $ 20.67 billion as analysts expected.
Sales were down 6% on an annualized basis, the fourth straight quarter of declines, according to a statement. Income had not fallen so much in five years. Under the new CEO Arvind Krishna, the company has tried to grow in the cloud computing and artificial intelligence sector, but its predecessor Ginni Rometty also saw sales declines.
IBM’s Cloud and Cognitive Software segment, which includes Red Hat, had sales of $ 6.84 billion, down about 5% year over year. That’s less than the FactSet consensus estimate of $ 7.18 billion.
The Global Technology Services unit had sales of $ 6.57 billion, a decrease of 6% and a decrease in FactSet consensus of $ 6.92 billion.
Global Business Services, which includes consulting, contributed $ 4.17 billion, down roughly 3% and more than the consensus of $ 4.08 billion.
System revenue of $ 2.50 billion from mainframe and other hardware sales fell 18%, below the consensus estimate of $ 2.26 billion. The company compares itself to a period in which Systems has increased sales with a new mainframe.
The company didn’t issue any formal earnings guidance, but it expects sales to grow in 2021 and free cash flow of $ 11 billion to $ 12 billion.
The company’s earnings per share fell 66%, the largest decline in three years, in part due to a pre-tax charge of $ 2.04 billion for structural measures in the quarter. The hit was less than expected; In October the company announced it would be around $ 2.3 billion.
The fee relates to the plan that IBM announced in October to outsource its Managed Infrastructure Services division, which offers hosting for websites and web-based software, to a separate public company by the end of 2021. The spin-off was the first major change for IBM since Krishna replaced Rometty as CEO in April. This department is currently located at Global Technology Services.
Also in the quarter, IBM announced that it had bought the cloud consulting service provider Nordcloud for an undisclosed amount.
Excluding the post-business move, IBM stock has risen around 5% since early 2021, while the S&P 500 has risen around 3% over the same period.
Executives will discuss the results with analysts on a conference call starting at 5:00 p.m. Eastern time.
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