SVP and Director at IBM Research Arvind Krishna speaks on stage during the 2016 Wired Business Conference in New York on June 16, 2016.
Brian Ach | Getty Images
IBM shares moved 3% lower in extended trading on Wednesday after the company reported fourth-quarter revenue that fell short of analysts’ expectations.
Here’s how IBM performed:
- Earnings: $2.07 per share, adjusted, vs. $1.79 per share as expected by analysts, according to Refinitiv.
- Revenue: $20.37 billion, vs. $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 has sought to go bigger in cloud computing and artificial intelligence under new CEO Arvind Krishna, but revenue declines also rankled his predecessor, Ginni Rometty.
IBM’s Cloud and Cognitive Software segment that includes Red Hat produced $6.84 billion in revenue, down about 5% year over year. That’s lower than the FactSet consensus estimate of $7.18 billion.
The Global Technology Services unit came up with $6.57 billion in revenue, which was down 6% and below 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.
Systems revenue of $2.50 billion, from sales of mainframe computers and other hardware, was down by 18% and under the $2.26 billion consensus estimate. The company is comparing against a period when Systems revenue rose from a new mainframe.
The company did not issue formal earnings guidance but did say 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 spin off its Managed Infrastructure Services division, which offers hosting for web sites and web-based software, into a separate public company by the end of 2021. The plan amounted to the first major shift for IBM since Krishna replaced Rometty as CEO in April. That division currently sits within Global Technology Services.
Also in the quarter IBM said it had agreed to buy cloud consulting services provider Nordcloud for an undisclosed sum.
Excluding the after-hours move, IBM stock is up about 5% since the start of 2021, while the S&P 500 is up around 3% over the same period.
Executives will discuss the results with analysts on a conference call starting at 5 p.m. Eastern time.
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