IBM Profits Top Estimates, Revenue Misses
IBM posted mixed results for the fourth quarter, with profits ahead of estimates but revenue coming in short amid continued pressures from global economy. For the quarter, IBM reported revenue of $20.4 billion, down 6% (or 8% adjusted for currency and divested businesses). Non-GAAP profits were $2.07 a share. On a GAAP basis, the company earned $1.41 a share, reflecting more than $2 billion in restructuring costs.
The company said it expects full-year 2021 revenue to show positive growth compared with 2020. IBM projects full-year 2021 adjusted cash flow between $11 billion and $12 billion, up from $10.8 billion in 2020, and between $12 billion and $13 billion in 2022. The company didn’t provide detailed full-year revenue or profit guidance, and as a matter of standard practice doesn’t provide quarterly guidance. IBM also didn’t provide new details on the planned spinoff of its $19 billion managed-infrastructure services business, which is expected to be completed by the end of the year.
“We made progress in 2020 growing our hybrid cloud platform as the foundation for our clients’ digital transformations while dealing with the broader uncertainty of the macro environment,” CEO Arvind Krishna said in a statement. “The actions we are taking to focus on hybrid cloud and AI will take hold, giving us confidence we can achieve revenue growth in 2021.”
IBM said it had total cloud revenue in the December quarter of $7.5 billion, up 10%, while Red Hat revenue was up 19%. GAAP gross margin was 51.7% while non-GAAP gross margin was 52.5%, both up 70 basis points from a year earlier. (A basis point in 1/100th of a percentage point.) IBM paid down $3.9 billion in debt in the latest quarter. The company isn’t currently repurchasing its own stock. For the full year, total cloud revenue topped $25 billion, up 20%.