IBM International Business Machines Corp

By Jay Greene 

International Business Machines Corp.'s revenue fell 3.5%, a second consecutive quarterly drop that underscores significant challenges the technology giant faces in recapturing growth.

Even so, IBM said it expects operating per-share earnings to hit $13.90 in the current fiscal year, compared with $13.81 for 2018. The company doesn't forecast revenue.

Shares rose 5% in after-hours trading after closing at $122.49.

For the fourth quarter, revenue came in at $21.76 billion, compared with $22.54 billion a year ago. IBM swung to a profit of $1.95 billion from a $1.05 billion net loss a year earlier, when it took a $5.5 billion charge related to the U.S. Tax Cuts and Jobs Act of 2017.

The most recent quarter included a $1.9 billion charge largely related to deferred taxes.

Analysts surveyed by Refinitiv had expected revenue of $21.71 billion. Other polls of Wall Street analysts had projected even higher revenue; S&P Global Market Intelligence had estimated $21.79 billion in revenue.

Chief Executive Ginni Rometty has struggled since taking over the company in 2012 to turn around Big Blue's fortunes. Just 12 months ago, IBM triumphantly returned to growth after posting nearly six years of shrinking revenue.

One hurdle IBM faced in the final months of 2018 was a tough comparison to results from a year ago, when the company had benefited from the recent introduction of a new mainframe system. That business dropped 44% in the most recent quarter after growing 71% a year ago, finance chief James Kavanaugh said in an interview.

Under Ms. Rometty, the company has been trying to boost a group of fast-growing businesses it calls strategic imperatives. Those businesses -- cloud computing and data analytics, among others -- grew 5% in the quarter to $11.5 billion, Mr. Kavanaugh said.

IBM moved to rev up those business in October, announcing plans to buy Red Hat Inc. for about $33 billion. IBM is counting on the deal, its largest ever, to increase its business of selling so-called hybrid services in which companies run programs that use computing resources from their own servers and web services from IBM and others at the same time.

Mr. Kavanaugh said IBM still expects the Red Hat deal to close in the second half of this year.

Write to Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

January 22, 2019 17:03 ET (22:03 GMT)

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