IBM Earnings Hint at Signs of Turnaround -- Update
21 Enero 2020 - 04:52PM
Noticias Dow Jones
By Asa Fitch
International Business Machines Corp. reported a slight increase
in quarterly revenue, ending a streak of falling sales and
providing a first indication Chief Executive Ginni Rometty's
roughly $33 billion acquisition of open-source software giant Red
Hat may help turn around Big Blue's fortunes.
The company on Tuesday said fourth-quarter revenue rose 0.1% to
$21.78 billion in the quarter after five straight quarters of
year-over-year declines.
Adjusted earnings per share fell around 3% to $4.71 but came in
ahead of expectations of analysts surveyed by FactSet. Analysts had
projected $4.69 adjusted per-share earnings for the quarter ended
December 31. Adjusted net income fell by about 5% to $4.2 billion,
IBM said.
IBM also issued an upbeat outlook for the current year. Adjusted
earnings per share for this year should be at least $13.35, up from
$12.81 in 2019, the company said. Analysts surveyed by FactSet were
forecasting the company to earn $13.28 this year.
IBM doesn't provide revenue guidance, but Ms. Rometty said sales
should continue on an upward trajectory. "This positions us for
sustained revenue growth in 2020," she said.
IBM shares rose 4.2% in aftermarket trading.
Boosting IBM sales has been a difficult task for Ms. Rometty
since she took over in 2012 as CEO of the iconic tech company.
Quarterly sales slid throughout her first several years as
customers changed their IT spending priorities and IBM was slow to
respond. IBM briefly halted that slide in 2017 and 2018, only for
quarterly revenue to fall again.
IBM is expected to get a boost this year from a new generation
of mainframe computers introduced late last year and from Red Hat,
where adjusted revenue grew by 24% in the quarter. IBM finalized
its purchase of Red Hat, which sells open-source software support
and training services, in July.
The Red Hat acquisition, Ms. Rometty has said, should bolster
IBM's competitiveness in cloud-computing, where it has lagged
behind market leaders such as Amazon.com Inc. and Microsoft Corp.
IBM said the fourth quarter was its strongest yet, in the cloud,
with 21% growth to $6.8 billion of sales. Amazon and Microsoft
still post higher growth rates in this market, though companies
differ in what cloud services they offer and how they calculate
those sales.
The gains for IBM from the addition of Red Hat haven't yet fully
hit the bottom line. IBM can't immediately count all of Red Hat's
deferred revenue as its own sales under accounting rules, while the
company has to reflect all costs it has taken on.
IBM was slow to embrace the cloud-computing model where
customers rent computing horsepower rather than buy and pay to
maintain the equipment. But cloud computing took off over the past
decade. Ms. Rometty said Red Hat would help IBM be a leader as that
market evolves to the so-called hybrid cloud, where companies mix
on-site storage and rented server capacity.
The systems segment, which includes sales of the new mainframe
computers, delivered $3 billion in sales, a 16% increase compared
with the prior year.
Some of IBM's legacy businesses continued to struggle, though.
The technology-services segment, which includes tech support and
outsourcing services, saw a 4.8% fall in revenue to about $6.9
billion.
Write to Asa Fitch at asa.fitch@wsj.com
(END) Dow Jones Newswires
January 21, 2020 17:37 ET (22:37 GMT)
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