SVP and Director at IBM Research Arvind Krishna will speak on stage at the 2016 Wired Business Conference in New York on June 16, 2016.
Brian But | Getty Images
IBM shares moved 6% lower in extended trading Wednesday after the company reported fourth-quarter earnings that fell short of analysts ’eyes.
Here’s how IBM achieved:
- Earnings: $ 2.07 per share, adjusted, vs. $ 1.79 per share as analysts would expect, according to Refinitiv.
- Income: $ 20.37 billion, vs. $ 20.67 billion as analysts would expect, according to Refinitiv.
Revenues fell 6% year-on-year, the fourth consecutive quarter of decline, according to a report. The company has tried to grow more in cloud computing and artificial intelligence under new CEO Arvind Krishna, but declining revenues also rank its predecessor, Ginni Rometty.
IBM’s Cloud and Cognitive Software division that includes Red Hat generated $ 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 rose $ 6.57 billion in revenue, down 6% and below the $ 6.92 billion FactSet consensus.
Global Business Services, which includes consulting, posted $ 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 18% and below the consensus estimate of $ 2.26 billion. The company compares a time when Systems ’revenue rose from a new core framework.
The company did not issue formal earnings guidance but said it expects revenue growth in 2021, along with $ 11 billion to $ 12 billion in free cash flow.
The company’s earnings per share fell 66%, the strongest decline in three years, partly due to a $ 2.04 billion pre-tax cost for structural operations in the fourth quarter.
The cost is related to the plan announced by IBM in October to turn over their Managed Infrastructure Services division, which offers hosting for web-based websites and software, which into a separate public company by the end of 2021. This result was the first major move for IBM since Krishna replaced Rometty as CEO in April. That sector is currently within Global Technology Services.
Also in the quarter IBM said it had agreed to buy cloud advisory services provider Nordcloud for an undisclosed amount.
Excluding the after-hours trend, IBM stock is up about 5% from the start of 2021, while the S&P 500 is up about 3% over the same period.
Officials will discuss the findings with analysts on a conference call starting at 5pm Eastern time.
This is breaking news. Please check back for updates.
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