- IBM (NYSE:IBM) shares are down 4.4% aftermarket despite the fact that Big Blue beat EPS and revenue estimates and posted its first year-over-year revenue growth in almost six years.
- Segment performance: Cognitive Solutions (solutions and transaction processing software), $5.4B (flat in constant currency); Global Business Services (consulting, global process services, and application management), $4.2B (-2% Y/Y); Technology Services & Cloud Platforms (infrastructure services, tech support services, integration hardware), $9.2B (-4%); Systems (systems hardware and OS software), $3.3B (+28%); Global Financing (financing and used equipment sales), $450M (-2%).
- Strategic imperatives: Revenue was up 14% on the year to $11.1B and accounted for 46% of overall revenue for the year. Cloud revenue is noted below but the annual exit run rate for as-a-service revenue increased 18% to $10.3B, mobile revenue was up 21, and security revenue up 127%.
- Cloud performance: Cloud revenue increased 27% on the year to $5.5B. Barclays (LON:BARC) gave IBM a double upgrade yesterday on its cloud potential.
- Tax reform: IBM excludes a one-time charge of $5.5B in Q4 associated with the U.S. tax reform. GAAP tax rate for Q4 was 124% (including the charge) and 49% for the full year. Non-GAAP tax rate was 6% for Q4 and 7% for FY17. IBM previously forecasted a tax rate of 12% to 18% for FY18 and the company had about $71B in overseas cash at the end of 2016.
- Financials: Cash from operating activities, $5.7B (including Global Financing receivables); FCF, $6.8B; cash on hand, $12.6B; debt, $46.8B (including $31.4B in Global Financing debt.)
- Investor returns: IBM returned $1.4B in dividends and $0.7B of gross share repurchases in the quarter and ended the year with $3.8B remaining in its current share repurchase program.
- Earnings call: Call begins at 5 pm Eastern Time with a webcast available here.
- Will update with guidance after the call.
- Previously: International Business Machines beats by $0.01, beats on revenue (Jan. 18)
- Now read: IBM Plans Massive Cost Cuts - Will It Boost Earnings?
Original article