IBM Gains as Quarterly Earnings and 2019 Outlook Beat Estimates

IBM Gains as Quarterly Earnings and 2019 Outlook Beat Estimates
Fotolia

IBM beat analysts’ estimates for sales and earnings in the fourth quarter and gave a positive forecast for this year, led by its consulting businesses, according to Bloomberg.

Revenue in the fourth quarter was $21.8 billion, topping the average analyst forecast of $21.7 billion. Earnings were $4.87 a share in the fourth quarter, also beating analysts’ forecasts. IBM said it sees adjusted earnings per share of at least $13.90 in 2019. The shares rose 7 percent in extended trading.

CEO Ginni Rometty has been touting IBM’s newer businesses in the cloud and artificial intelligence as agents for growth. But recently the company has seen increases in some of its more traditional markets instead. In the fourth quarter, IBM’s consulting business flipped from declines into growth, with revenue in the Global Business Services unit of $4.3 billion, up 4 percent from the same time last year.

Revenue from cloud-based offerings grew about 12 percent to $19.2 billion in 2018, about half the growth rate of last year. After six years of revenue declines, IBM showed two consecutive quarters of growth in the first half of 2018. Those were largely due to its legacy mainframes, however, the massive computers that help power global financial transactions and other complicated calculations for businesses and governments. And in the third quarter, sales gains slipped again by 2 percent. Gross margins grew slightly in the fourth quarter, to 49.1 percent.