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For the 19th straight quarter, IBM (NYSE: IBM) has reported declining revenues. But the silver lining in the results was its performance in its strategic imperatives. The company saw strong growth for the cloud, analytics, mobility, and security businesses. The growth wasn’t enough to keep the market happy. Despite the company surpassing market expectations, the stock fell post the result announcement.
IBM’s Financials
IBM’s fourth quarter revenues fell 1% to $21.8 billion compared with the Street’s forecast of $21.6 billion. Adjusted earnings of $5.01 per share were also better than the Street’s estimates of $4.88 for the quarter. While the earnings beat was impressive, it cannot be ignored that IBM managed to achieve that due to Intellectual Property (IP) income. Excluding those, IBM’s net income would have fallen short at $4.83 per share, clearly signifying the margin pressure on the company.
By segment, revenues from Cognitive Solutions grew 1% over the year to $5.3 billion. Global Business Services revenues fell 4% to $4.12 billion. Revenues from the Technology Services & Cloud Platforms grew 2% to $9.31 billion. Systems revenues continued to report one of the biggest declines at 13% to $2.53 billion. Global Financing revenues were down 2% to $447 million and revenues from other sources grew 53% to $66 million.
IBM’s performance on its strategic imperatives, which include cloud, analytics, mobility, and security operations remained impressive. For the quarter, cloud revenues grew 33% with an annual exit run rate for cloud-as-a-service revenue growing from $5.3 billion to $8.6 billion. Revenues from analytics grew 9% and mobile grew 16%. Revenues from security increased 7% over the year. Overall for the year, revenues from strategic imperatives came in at $32.8 billion, accounting for 41% of the company’s revenues.
