IBM falls despite posting first rise in revenue for 23 months

Andrew Cummings
January 20, 2018

But not any more. BlackRock Inc. now owns 52,936,360 shares of the technology company's stock worth $8,143,204,000 after buying an additional 1,241,441 shares during the last quarter.

It sure took its time. The charge includes re-measurement of deferred tax assets and liabilities and a tax on profits overseas. The company had revenue of $19.29 billion for the quarter, compared to analysts' expectations of $19.45 billion. If you adjust for currency rates, revenues were up one per cent, which, well, is still greater than zero.

On a GAAP basis, IBM posted a loss of $1.14 per share, compared to the $4.72 per share in earnings it reported a year earlier.

As part of the new deal, corporations have been granted the opportunity to pay a one-off bill to bring their profits under USA tax laws.

Net in the quarter swung to a loss of $52.8 million or 20 cents per diluted share from profit of $53.3 million or 23 cents in the same quarter previous year.

One potential green shoot for the company may be in its burgeoning cloud business, which accounts for 21% of IBM's revenues, up 10% in the last four years. Cloud and security grew the most year-over-year at 27% and 127%, respectively.


"Strategic imperative revenue may cross over the core franchises later this year", Mr. Milunovich said, "but there are a lot of industry trends working against a large incumbent like IBM".

But some said the growth since IBM launched its Z14 in September hinted at a different outcome.

Systems revenue was $3.3bn, a 32 per cent increase driven by strong System Z and Power Systems sales, or 28 per cent when taking currency effects into accont.

Earlier this month, it was reported by United Kingdom technology website The Register that IBM tapped multinational consultant Bain & Co.to offer recommendations and strategy for its global services and technology unit including redeploying approximately 30 percent of its Global Technology Services staffers through attrition in 2018. Cognitive Solutions revenue increased 3% to $5.4 billion in Q4.

Revenue was helped by the weakness of the dollar, since most of IBM's sales are outside the United States.

Park Presidio Capital Llc, which manages about $292.21 million and $614.77 million US Long portfolio, decreased its stake in Ss&C Technologies Hldgs Inc (NASDAQ:SSNC) by 375,110 shares to 324,890 shares, valued at $13.04M in 2017Q3, according to the filing.


Strategic Imperatives grew 14 percent in the quarter.

Interestingly, a substantial portion of this growth is coming from an old-school sector that is busy being refreshed: mainframe servers for data centers.

"Our strategic imperatives revenue again grew at a double-digit rate and now represents 46 percent of our total revenue, and we are pleased with our overall revenue growth in the quarter", IBM CEO Ginni Rometty said of Big Blue's first positive growth since 2012.

The global tech giant continues its transformation from personal computers and mainframes to technologies that come under what IBM calls its "strategic imperatives" performance, including big data, cloud computing and cybertechnology.

Non-GAAP earnings per share were $5.18 for the quarter ending on December 31, beating analyst expectations by a penny, according to Thomson Reuters.

IBM's results were all the better for having lowered investors' and analysts' expectations through the past six or so years, according to Lou Miscioscia, an analyst at Pivotal Research, talking to Reuters.


The good news was that the company's revenue finally rose in the latest fourth quarter. This acceleration was driven by two of its software businesses: transaction processing software, which is largely mainframe software; and operating systems software, which also has a high percentage of mainframe software.

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