- IBM (NYSE:IBM) held its Q4 earnings call (transcript) aftermarket yesterday and included FY18 guidance and more details on the quarterly report.
- FY18 guidance: Operating EPS flat on the year to “at least $13.80” (consensus: $13.92). FCF expected at about $12B. IBM expects a headwind from cash tax payments to the tune of about $600M year-to-year.
- Tax: 2018 operating tax rate of 14% to 18% (before any discretes) incorporates the new tax law and is a four-point headwind year-to-year. Management reminds investors that the company took discrete items in Q1 and Q2 last year, which brought the operating tax rate down to 7% for the year.
- Q4 margins: Bernstein analyst Toni Sacconaghi mentions during the call that GBS and Tech Services margin erosion was “the worst we’ve seen in history on a pretax basis.”
Operating gross margin was down a little over a point on the year and about 0.5 points behind guidance due to mix and yield delay in the Services business. Global Business Services margins were down 2.1 points to 24.8%, Cognitive Solutions down 3.5 points to 79.2%, Tech Services & Cloud Platforms down 2 points to 40.9%, and Systems down 1.2 points to 55.7%. - Earnings press release.
- IBM shares are down 3.2% premarket.
- Previously: International Business Machines beats by $0.01, beats on revenue (Jan. 18)
- Previously: IBM -4.4% despite beating Q4 estimates, posting first revenue growth in nearly 6 years (Jan. 18)
- Now read: IBM Revenue Rises, Stock Falls
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