IBM shares tumbled by 10.38% in early trading on Friday, after the computing giant’s fourth-quarter earnings missed analysts’ expectations.
IBM on Thursday reported a 6.5% year on year fall in revenues in the fourth-quarter to $20.37 billion, below the $20.67 billion analysts polled by Refinitiv had expected. It was the fourth consecutive quarter of falling sales.
Sales at the technology company’s biggest unit, cloud and cognitive software, fell around 4.6% to $6.84 billion from $7.16 billion in the same quarter a year earlier.
Although total cloud revenue increased 10% to $7.5 billion, it was slower than the 19% growth seen in the previous quarter.
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Excluding certain costs, IBM’s earnings per share was $2.07 in the fourth quarter, above expectations of $1.79.
The IBM stock price closed 1.21% higher on Thursday at $131.65 share. But investors jettisoned the stock on Friday after parsing the Q4 earnings, sending the share price tumbling to $117.98.
IBM chief executive Arvind Krishna said on a press call on Thursday: “Our performance reflects the fact that our clients continue to deal with the effects of the pandemic and broader uncertainty of the macro environment.”
“This put additional pressure on larger software transactions this quarter, and project delays in some services engagements.
“Notwithstanding these short-term market dynamics, we believe we have the plans in place and the focus inside the business to be able to grow in 2021.”
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Krishna is currently taking IBM through a turnaround plan that involves turning its infrastructure services arm into a separate public company.
IBM’s fourth-quarter difficulties highlight sharp divides in the stock market, even within the booming technology sector.
Netflix on Wednesday said it had surpassed 200 million subscribers in 2020 in its fourth-quarter earnings, sending its shares up around 15% for the week and triggering a broader rally in the Nasdaq.