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IBM earnings 4th quarter 2020

SVP and Director of IBM Research Arvind Krishna speaks on stage during the Wired Business Conference 2016 in New York on 16 June 2016.

Brian Ach | Getty Images

IBM shares moved 6% lower in expanded trading on Wednesday after the company reported fourth-quarter revenue below analysts’ expectations.

How IBM works:

  • Earnings: $ 2.07 pr. Stock, adjusted for $ 1
    .79 per share. Stock as expected by analysts, according to Refinitiv.
  • Income: $ 20.37 billion against $ 20.67 billion as expected by analysts, according to Refinitiv.

Revenue fell 6% year-on-year, the fourth consecutive quarter of declines, according to a statement. The company has tried to grow in cloud computing and artificial intelligence under the new CEO Arvind Krishna, but the drop in revenue also ranked its predecessor, Ginni Rometty.

IBM’s Cloud and Cognitive Software segment, which includes Red Hat, produced $ 6.84 billion. Dollars in revenue, which is about 5% lower than the year before. That is lower than the $ 7.18 billion FactSet consensus estimate.

The Global Technology Services unit came up with $ 6.57 billion. Revenue, which was down 6% and below $ 6.92 billion. FactSet Consensus.

Global Business Services, which includes consulting, contributed $ 4.17 billion dollars, which is approx. 3% less and more than the $ 4.08 billion consensus.

System revenue of $ 2.50 billion, from sales of mainframe computers and other hardware, fell by 18% and below the consensus estimate of $ 2.26 billion. The company compares to a period when revenues from Systems increased from a new mainframe.

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 Shares fell 66%, the sharpest fall in three years, partly due to a fee of 2.04 billion. Dollar before tax for structural actions in the quarter.

The fee relates to the plan announced by IBM in October to distribute the Managed Infrastructure Services division, which offers web hosting and web-based software, to a separate public company by the end of 2021. The spin-off amounted to the first major shift for IBM since Krishna replaced Rometty as CEO in April. This division currently sits 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 the move after opening hours, the IBM share has risen by approx. 5% since the beginning of 2021, while the S&P 500 has increased by approx. 3% in the same period.

Leaders will discuss the results with analysts at a conference call starting at 17 Eastern time.

This is news. Come back for updates.

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