IBM Research Vice President and Director Arvind Krishna speaks on stage during the New York Wired Business Conference on June 16, 2016.
Brian Ach | Getty Images
IBM shares fell 5% less in extended trading on Wednesday after the company reported fourth-quarter earnings that did not meet analysts ’expectations.
The following explains IBM’s performance:
- Earnings: $ 2.07 per share, adjusted, versus $ 1.79 per share, as analysts expected, according to Refinitiv.
- Income: $ 20,377 million, up from the $ 20,677 million analysts expected, according to Refinitiv.
According to a statement, revenues fell 6% annually, the fourth consecutive quarter of declines. The company has tried to grow in cloud computing and artificial intelligence with new CEO Arvind Krishna, but revenue crashes also destroyed its predecessor, Ginni Rometty.
The cognitive and IBM software segment that includes Red Hat generated revenue of $ 6.84 billion, a drop of approximately 5% year-on-year. This is lower than FactSet’s consensus estimate of $ 7.118 billion.
The Global Technology Services unit generated revenue of $ 6.57 billion, which fell 6% and below the $ 6.92 million FactSet consensus.
Global Business Services, which includes consulting, contributed $ 4.17 billion, down 3% and a consensus of more than $ 4.08 million.
Systems revenue of $ 2.50 billion, from sales of mainframe computers and other hardware, fell 18 percent and was below the consensus estimate of $ 2.26 billion. The company compares it to a period when Systems revenue increased from a new mainframe.
The company did not issue formal earnings guidelines, but said it expects revenue growth in 2021, along with between $ 11 billion and $ 12 billion in free cash flow.
During the quarter, IBM announced a plan to separate its Managed Infrastructure Services division, which offers website hosting and web-based software, into an independent public company in late 2021. The plan was equivalent to the first change. important for IBM as Krishna replaced Rometty as CEO in April. This division is currently within Global Technology Services.
Also in the quarter IBM said it had agreed to buy cloud consulting service provider Nordcloud for an undisclosed amount.
Excluding off-hours movement, IBM shares have risen about 5% since the beginning of 2021, while the S&P 500 has risen about 3% over the same period.
Executives will discuss the results with analysts at a conference call starting at 5 p.m., Eastern Time.
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