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- IBM's (NYSE:IBM) fourth-quarter results were better-than-expected, sending the stock higher, leading invest firm Citi to wonder whether the IT services company had "turned the corner."
- Analyst Jim Suva kept his neutral rating, but slightly lowered his price target to $140, noting that it is too early to answer the question as the firm is lowering its forward estimates on the Kyndryl Holdings (NYSE:KD) spin-out.
- "We look to see if this single data point of earnings can turn the corner into a sustainable trend from improvement aside from easy [year-over-year] comparables," Suva wrote in a note to clients.
- IBM shares are higher in pre-market trading by nearly 1% to $130.03, following the results.
- For the period ending Dec. 31, the Armonk, New York-based company earned $3.35 a share, excluding one-time items, on $16.7 billion in sales, compared to estimates of $3.29 a share on $16.1 billion in revenue.
- IBM (IBM) added that its gross margins fell slightly to 56.9% from 58.9%, but its software business, which includes its cloud and cognitive software units, generated $7.27 billion in revenue, up 8% year-over-year.
- "The trend we are seeing is clear," said IBM (IBM) Chief Executive Arvind Krishna, on a conference call to discuss the company's results. Krishna said IBM (IBM) is seeing "high demand for our capabilities in several areas," including hybrid cloud, where the company now has 3,800 clients, or 1,000 more than a year ago.
- In addition, the consulting unit saw revenue climb 13% to $4.75 billion, while infrastructure-related revenue declined 0.3% to $4.41 billion.
- Earlier this month, IBM (IBM) said it would sell its Watson health unit to Francisco Partners for an undisclosed amount.