IBM Reported Revenue that Beats Estimates
IBM reported its fourth quarter revenue that has beat estimates. Tech giant also broke a streak of five consecutive declines in the last quarter.
Quarterly sales were $21.8 billion, 0.1% up compared with the same period a year earlier, IBM said in a statement. The increase came from acquisition of Red Hat that helped to boost the cloud and cognitive software division 8.7%. The company had a record breaking cloud revenue of $6.8 billion.
“We ended 2019 on a strong note, returning to overall revenue growth in the quarter, led by accelerated cloud performance," said Ginni Rometty, IBM chairman, president and CEO. "Looking ahead, this positions us for sustained revenue growth in 2020 as we continue to help our clients shift their mission-critical workloads to the hybrid cloud and scale their efforts to become a cognitive enterprise.”
Red Hat contributed $1 billion in revenue during the quarter, but IBM could recognize only $573 million because of US accounting standards. The company reported earnings excluding some costs of $4.71 a share. They expect adjusted earnings per share of at least $13.35 for 2020.
Global Technology Services, a sector that brings almost 30% of IBM’s total revenue, continued to decline. The technology consulting unit had revenue of $6.9 billion, down 4.8% on a yearly basis. Global Business Services revenue also dropped, to $4.2 billion, marking a 0.6% decline.
“In 2019, we continued to invest in the higher-value growth areas of the industry and took bold actions, including several divestitures and a major acquisition, to position our business, which are reflected in our strong gross margin performance," said James Kavanaugh, IBM senior vice president and CFO. "After completing the acquisition of Red Hat, and with strong free cash flow and disciplined financial management, we significantly deleveraged in the second half.”