SVP and IBM Research Director Arvind Krishna speak on stage at the 2016 Wired Business Conference in New York on June 16, 2016.
Brian Ach | Getty Images
IBM shares rose 6% lower in extended trading on Wednesday after the company reported fourth-quarter earnings that were below analysts’ expectations.
Here’s how IBM performed:
- Earnings: $ 2.07 per share, adjusted to $ 1.79 per share as expected by analysts, according to Refinitiv.
- Income: According to Refinitiv $ 20.37 billion, compared to $ 20.67 billion, as expected by analysts.
Revenue fell 6% year-on-year, the fourth consecutive quarter of declines, according to a statement. The company sought to grow in cloud computing and artificial intelligence under the new CEO, Arvind Krishna, but the decline in revenue also ranked its predecessor, Ginni Rometty.
IBM’s cloud and cognitive software segment, which includes Red Hat, generated $ 6.84 billion in revenue, down about 5% year-on-year. This is lower than the $ 7.18 billion FactSet consensus estimate.
The Global Technology Services unit generated revenue of $ 6.57 billion, which was 6% lower than the $ 6.92 billion FactSet consensus.
Global Business Services, which includes consulting, contributed $ 4.17 billion, down about 3% and more than the $ 4.08 billion consensus.
System revenue of $ 2.50 billion, from sales of mainframe computers and other hardware, fell 18% to below the $ 2.26 billion consensus estimate. The company compares to a period when Systems’ revenue from a new mainframe increased.
The company’s earnings per share fell 66%, the sharpest drop in three years, in part due to a $ 2.04 billion progress expense for structural actions in the quarter.
The company did not issue a formal revenue list, 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 plan to merge its Managed Infrastructure Services division, which offers web hosting and web-based software, into a separate public company by 2021. The plan was the first major shift for IBM since Krishna replaced Rometty as CEO in April. The division is currently under Global Technology Services.
IBM also said in the quarter that it had agreed to buy cloud advisory provider Nordcloud for an undisclosed amount.
Excluding the after-hours move, IBM’s share has risen by about 5% since the beginning of 2021, while the S&P 500 has risen by about 3% over the same period.
Managers will discuss the results with analysts during a conference starting at 5pm Eastern time.
This is news. Check back for updates.
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