IBM Earnings Hint at Signs of Turnaround

Date : 01/21/2020 @ 9:43PM
Source : Dow Jones News
Stock : International Business Machines Corp (IBM)
Quote : 110.93  -2.0 (-1.77%) @ 12:58AM
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IBM Earnings Hint at Signs of Turnaround

International Business M... (NYSE:IBM)
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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)

Copyright (c) 2020 Dow Jones & Company, Inc.

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