IBM Beats In Q4, But Sales Of $22.1B Are The 15th Straight Quarter Of Decline For Big Blue

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IBM reported its Q4 earnings at the close of trading today, and while its revenues were the 15th-straight quarter of declines, Big Blue beat analyst expectations both on sales of $22.1 billion, and non-GAAP earnings per share of $4.84. Analysts were expecting EPS of $4.81 on sales of $22.04 billion.

Non-GAAP net income was $4.7 billion compared with $5.8 billion in the fourth quarter of 2014, down 19%.

It also posted full-year revenues of $81.7 billion, with full year non-GAAP EPS of $14.92, down 10% on 2014, citing the divestiture of its “System x” business to Lenovo.

As a point of comparison, last quarter the company missed on revenues of $19.3 billion and revised down its full-year profit forecast to between $14.75 and $15.75 per share for the full year.

Wall Street looks like it’s not completely pleased with these numbers. After declining 1.43% in trading today, after hours the stock is down around 0.77% in after-hours trading. We’ll keep monitoring it to see what happens next.

“We continue to make significant progress in our transformation to higher value. In 2015, our strategic imperatives of cloud, analytics, mobile, social and security grew 26 percent to $29 billion and now represent 35 percent of our total revenue,” said Ginni Rometty, IBM chairman, president and chief executive officer, in a statement.  “We strengthened our existing portfolio while investing aggressively in new opportunities like Watson Health, Watson Internet of Things and hybrid cloud. As we transform to a cognitive solutions and cloud platform company, we are well positioned to continue delivering greater value to our clients and returning capital to our shareholders.”

IBM has been in the midst of a multi-year transformation in which it has turned its attention to cloud computing, analytics, cognitive computing and security as major themes. 

Breaking down the business into the different categories, IBM says that “strategic imperatives” — which include cloud, analytics and engagement — were up 10% year to year.  Full-year sales from strategic imperatives increased 17% to $28.9 billion and now represent 35% of total IBM consolidated revenue.

Total cloud revenues (public, private and hybrid) increased 43% to $10.2 billion in the year. Revenues from business analytics increased 7% to $17.9 billion. Revenues from mobile more than tripled and security was up 5%, but IBM didn’t break out the actual numbers, an indication that they are not yet that large.

But if you are wondering where all the decline is coming from,  you need to look at the quarterly numbers and the bigger business segments:

Global Technology Services revenues were down 7% to $8.1 billion. Global Business Services segment revenues were down 10% to $4.3 billion. And revenues from the Software segment were down 11% to $6.8 billion compared with the Q4 of 2014.

Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Workforce Solutions and Rational products, were also down to $4.9 billion, a decline of 10% year to year.  Operating systems revenues of $0.5 billion were down 12% year to year. Revenues from the Systems Hardware segment totaled $2.4 billion for the quarter, down 1%.

More to come.