IBM CFO James Kavanaugh joins "Closing Bell" to discuss the company's Q4 earnings results. IBM stock moved as much as 5% higher on Tuesday after the company reported fourth-quarter results that beat analysts’ estimates and forecast earnings growth in 2020.
Here’s how the company did:
Earnings: Excluding certain items, $4.71 per share, vs. $4.69 per share as expected by analysts, according to Refinitiv.
Revenue: $21.77 billion, vs. $21.64 billion as expected by analysts, according to Refinitiv.
Revenue grew slightly on an annualized basis, IBM said in a statement, after it had fallen five quarters in a row, after the conclusion of an upgrade cycle for its z14 mainframe computer. The company has been shipping a new model, the z15, for more than one quarter now.
In terms of guidance, IBM said that for 2020 it expects $13.35 in earnings per share, excluding certain items. That’s above the $13.29 consensus from analysts surveyed by Refinitiv, and it implies a 4% increase from the prior year. IBM’s revenue will go up year over year in 2020, Jim Kavanaugh, the company’s chief financial officer, told analysts on a conference call on Tuesday. After the call the stock was up 3.8% in extended trading.
The Cloud and Cognitive Software segment, which encompasses transaction processing platforms, cognitive applications and cloud and data platforms like Red Hat, came up with $7.24 billion in revenue. That’s up 9% year over year and more than the $7.12 billion consensus among analysts polled by FactSet. Revenue from Red Hat, a $34 billion acquisition that closed in July, was up 24% in the quarter. In the prior quarter, Red Hat revenue grew 19%.
IBM’s Global Technology Services segment produced $6.95 billion in revenue, down about 5% year over year and less than the $6.99 billion FactSet consensus estimate. The segment contains infrastructure and cloud services, as well as technology support services.
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