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IBM reduced its debt position to $ 61.4 billion by the end of the year from a high of $ 73 billion.
Ethan Miller / Getty Images
IBM
achieved mixed results for the fourth quarter, with gains ahead of Street estimates, but revenue comes in the face of continued pressure from a soft global economy.
For the quarter, IBM (ticker: IBM) reported revenue of $ 20.4 billion, a decrease of 6% (or 8% adjusted for currency and sales enterprises) and below the Wall Street consensus forecast of $ 20, 6 billion. The non-GAAP earnings were $ 2.07 per share, better than the Street Consensus view at $ 1.79 per share. On a GAAP basis, the company earned $ 1.41 per share, reflecting more than $ 2 billion in restructuring costs.
The stock fell 7% on Thursday.
The company said it expects full-year 2021 revenue to show positive growth compared to 2020. IBM projects the 2021 annual adjusted cash flow between $ 11 billion and $ 12 billion, compared to $ 10.8 billion in 2020 and between $ 12 billion and $ 13 billion in 2022 IBM did not provide detailed revenue or profit guidance for the full year, and as a standard practice, it provides no quarterly guidance.
IBM also did not provide new details about the planned impact of its $ 19 billion-managed infrastructure services industry, which is expected to be completed by the end of the year.
Jim Kavanaugh, CFO, in an interview with Barron’s that revenue was slightly lower than normal seasonality due to continued economic uncertainty, but that earnings per share came above normal seasonality as the company cut costs and reduced debt.
Kavanaugh notes that the company reduced its debt position to $ 61.4 billion at the end of the year from a high of $ 73 billion after the completion of the acquisition of Red Hat. He notes that IBM owes $ 7 billion in 2021 and that the amount should reach $ 50 billion by the end of this year.
“We have made progress in 2020 with the growth of our hybrid cloud platform as the basis for the digital transformation of our customers while addressing the broader uncertainty of the macro environment,” CEO Arvind Krishna said in a statement. “The actions we are taking to focus on hybrid cloud and AI will take hold and give us confidence that we can grow revenue in 2021.”
IBM said total cloud revenue in the December quarter was $ 7.5 billion, up 10%, while Red Hat revenue was up 19%. The GAAP gross margin was 51.7%, while the non-GAAP gross margin was 52.5%, both of which were 70 basis points higher than a year earlier. (A 1 / 100th percentage point.) IBM paid $ 3.9 billion in debt in the most recent quarter. The company is not currently buying back its own stake.
For the full year, total cloud revenue was $ 25 billion higher, 20% higher. Cloud is now 37% of IBM’s total revenue. IBM just says it
Amazon.com
(AMZN) and
Microsoft
(MSFT) has higher cloud revenue than IBM.
IBM operates in five segments; here is an outline of their performance in the quarter.
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Cloud and cognitive software revenue was $ 6.8 billion, which was 4.5% lower. This includes 9% growth in cloud and data platforms, led by Red Hat. The income from cognitive applications was low. Revenue for processing platforms was 24% lower; cloud revenue increased by 39%.
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Global business services’ revenue was $ 4.2 billion, which was 2.7% lower.
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Global technology services revenue was $ 6.6 billion, down 5.5%.
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The system revenue, including hardware and operating system software, had revenue of $ 2.5 billion, which was 17.8% lower, mainly due to lower hardware sales.
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Global financing income was $ 286 million, a decrease of 4.8%.
At the end of Thursday’s trading day, IBM’s shares rose 1.3% to $ 131.80. The
S&P 500
was fractionally up.
Write to Eric J. Savitz by [email protected]