IBM’s fourth quarter revenue fell 6% from a year ago, but the company said it expects to return to growth in 2021.
The company’s earnings report was a mixed bag. IBM reported non-GAAP earnings of $2.07 a share and $1.41 a share under generally accepted accounting practices. However, IBM’s fourth quarter revenue was down 6% to $20.4 billion.
Analysts were modeling fourth quarter revenue of $20.67 billion with non-GAAP earnings of $1.79 a share.
IBM said that total cloud revenue was $7.5 billion, up 10%, and Red Hat sales were up 19%.
For the year, IBM reported earnings of $6.13 a share on revenue of $73.6 billion, down 5%. Arvind Krishna, CEO of IBM, said the company made progress in focusing the company hybrid cloud and artificial intelligence.
IBM’s grand plan
While IBM’s fourth quarter results weren’t going to satisfy folks looking for big growth figures, Big Blue does have a plan that may work out.
IBM has gone on a shopping spree of companies that manage cloud deployments that span across Amazon Web Services, Microsoft Azure, and Google Cloud.
The upshot here is that IBM is aiming to be the Switzerland of multicloud. With Red Hat and open source, IBM can run your hybrid cloud and with newly acquired assets it’ll have a crew of consultants to be a cloud connector.
Recent moves by IBM include:
These acquisition are likely to become more meaningful later in 2021 as IBM spins off its managed services unit, which will be run by Martin Schroeter.
It’s clear there’s a race on to be the control plane in multicloud deployments, IBM has some key assets to be a player.
IBM’s business units see revenue declines
By unit, IBM’s fourth quarter results showed declines across all units.
- In the cloud and cognitive software division, which includes Red Hat, cognitive applications and processing platforms, IBM delivered revenue of $6.8 billion, down 4.5%. IBM saw growth in security, IoT and Red Hat, but transaction processing platforms took a hit.
- Global business services saw revenue of $4.2 billion, down 2.7% in the fourth quarter.
- Global Technology Services revenue in the fourth quarter fell 5.5% from a year ago to $6.6 billion.
- Systems revenue fell 17.8% to $2.5 billion.
As for the outlook, IBM said it expects to increase revenue in 2021 and generate adjusted free cash flow of $11 billion to $12 billion for the year.
