IBM CEO Arvind Krishna speaks at the Business 20 (B-20) Summit in New Delhi on August 25, 2023.
Prakash Singh | Bloomberg | Getty Images
IBM Shares rose as much as 6% in after-hours trading Wednesday after the technology and services provider reported fourth-quarter earnings that beat Wall Street expectations.
Here’s how the company performed compared to the consensus among analysts surveyed by LSEG (formerly Refinitiv):
- Earnings per share: Adjusted $3.87, forecast $3.78.
- Revenue: $17.38 billion vs. $17.30 billion expected.
According to one source, IBM’s revenue for the quarter was up 4% year-over-year. statement. Net income was $3.29 billion, or $3.55 per share, up from $2.71 billion, or $2.96 per share, in the year-ago period. Chief Financial Officer James Kavanaugh said in an interview with CNBC that the company faces “a very difficult, uncertain and volatile macroeconomic environment.”
Free cash flow for the year totaled $11.2 billion, exceeding management’s request for $10.5 billion. The company’s gross profit margin for the fourth quarter was 59.1%, the highest since 1999. Capital spending fell in the quarter as a result of the real estate cuts, Kavanaugh said on a conference call with analysts.
IBM said software revenue rose 3% to $7.51 billion, but fell short of the $7.67 billion consensus of analysts surveyed by StreetAccount.
Consulting revenue was $5.05 billion, up about 6%, but ultimately below the StreetAccount consensus of $5.12.
Revenue from infrastructure, such as mainframe computers, totaled $4.6 billion, an increase of about 3%. StreetAccount’s consensus was for him to make $4.28 billion. In particular, the distributed infrastructure category, which includes servers powered by IBM’s power chips, accelerated to 8%, compared to a 4% decline in the third quarter.
During the quarter, IBM committed $500 million. venture fund Targeting enterprise artificial intelligence startups, announced plans Software AG will pay 2.13 billion euros, or $2.32 billion at current exchange rates, for StreamSets and webMethods, two majority-owned businesses.
Regarding its outlook, IBM said it expects free cash flow to be $12 billion in 2024 and sales growth to be in the mid-single digits, excluding the impact of currency fluctuations.
Despite the after-hours price action, IBM stock is up about 7% year to date in 2024, while the S&P 500 U.S. stock index is up 2% over the same period.
—CNBC’s Kristina Partinevelos contributed to this report.
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