IBM Tops Forecasts|
January 22, 2020
IBM reported fourth-quarter and full-year 2019 earnings results. Earnings not counting certain items, came in at $4.71 per share with only $4.69 per share as expected. The firm's revenue was reported at $21.77 billion with Wall Street looking for $21.64 billion.
The company expects GAAP diluted earnings per share of at least $10.57, and operating (non-GAAP) diluted earnings per share of at least $13.35. Operating (non-GAAP) diluted earnings per share excludes $2.78 per share of charges for: amortization of purchased intangible assets and other acquisition-related charges, including pre-closing charges, such as financing costs; retirement-related charges; and tax reform enactment impacts. IBM expects free cash flow of approximately $12.5 billion.
The consensus estimate for operating (non-GAAP) diluted earnings per share was only $13.29.
We ended 2019 on a strong note, returning to overall revenue growth in the quarter, led by accelerated cloud performance," said Ginni Rometty, IBM chairman, president and chief executive officer. "Looking ahead, this positions us for sustained revenue growth in 2020 as we continue to help our clients shift their mission-critical workloads to the hybrid cloud and scale their efforts to become a cognitive enterprise.
In 2019, we continued to invest in the higher-value growth areas of the industry and took bold actions including several divestitures and a major acquisition to position our business, which are reflected in our strong gross margin performance," said James Kavanaugh, IBM senior vice president and chief financial officer. "After completing the acquisition of Red Hat, and with strong free cash flow and disciplined financial management, we significantly deleveraged in the second half.
Flow and Balance Sheet
Global Business Services (includes Consulting, Application Management and Global Process Services) revenues of $4.2 billion, down 0.6 percent (down 0.3 percent adjusting for currency), with growth in Consulting, up 4 percent.
Global Technology Services (includes Infrastructure & Cloud Services and Technology Support Services) revenues of $6.9 billion, down 4.8 percent (down 4.0 percent adjusting for currency).
Systems (includes Systems Hardware and Operating Systems Software) revenues of $3.0 billion, up 16.0 percent (up 16.5 percent adjusting for currency), led by IBM Z, up 62 percent (up 63 percent adjusting for currency); Storage Systems revenue grew 3 percent.
Global Financing (includes financing and used equipment sales) revenues of $301 million, down 25.3 percent (down 24.9 percent adjusting for currency); revenue reflects the wind-down of OEM commercial financing.