IBM Earnings Hint at Signs of Turnaround
January 21 2020 - 4:43PM
Dow Jones News
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.
"This positions us for sustained revenue growth in 2020," Ms.
Rometty said.
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.
Write to Asa Fitch at asa.fitch@wsj.com
(END) Dow Jones Newswires
January 21, 2020 16:28 ET (21:28 GMT)
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