Figure: IBM CEO Rory Lan talked about IBMs acquisition of Red Hat in an interview
Netease Technologies News January 23, according to CNBC reports, IBM has just released the companys fourth quarter of fiscal year 2018 and the full years results. IBM reported fourth-quarter revenue of $21.76 billion and net profit of $1.951 billion, higher than analysts expected. IBMs share price rose nearly 7% after the results were released.
The following are key figures:
In the fourth quarter of fiscal year 2018, IBMs revenue was $21.76 billion, down 3% from $22.543 billion a year earlier. According to Refinitiv, analysts expect $21.71 billion.
IBM made a net profit of $1.951 billion in the fourth quarter of fiscal year 2018, compared with a net loss of $1.054 billion in the same period last year.
Refinitiv data show that, excluding certain items, IBMs fourth-quarter EPS (earnings per share) was $4.87, higher than analystsexpectations of $4.82.
By the end of the fourth quarter of 2018, IBM had $12.2 billion in cash and $45.8 billion in total debt, including $31.2 billion in global financing.
Excluding certain items, IBM earned $13.81 per share for the whole year of 2018. According to Refinitiv, analysts had expected $13.78.
IBMs largest business unit, Technology Services and Cloud Platforms, has revenue of $8.9 billion. Analysts surveyed by FactSet expect revenue from this segment to be $9.04 billion.
IBMs second largest business unit, Cognitive Solutions, has revenue of $5.5 billion. This exceeds the consensus estimate of FactSet analysts, which is $5.27 billion.
IBMs Global Business Services has revenue of $4.3 billion, exceeding its forecast of $4.15 billion.
IBM Systems has revenue of $2.6 billion, below expectations of $2.77 billion.
IBM Global Financing contributed $402 million in revenue, less than the $426 million expected.
In the fourth quarter, IBM announced its intention to buy Red Hat for $34 billion, announced a chip manufacturing deal with Samsung and sold software assets to HCLTechnologies for $1.8 billion. The acquisition of Red Hat is expected to be completed in the second half of 2019.
Arvind Ramnani, an analyst at KeyBanc Capital Markets, wrote in a report to clients Thursday: The deal pushed IBM to become a leading cloud computing service provider and significantly improved its competitive position with Amazon, Microsoft and Google... However, according to our dialogue with investors, it is worrying that the merged entity retains the ability of Red Hat employees. Although the acquisition has transformational potential, IBM may overpay the transaction with 32 times EV/FCF (CY19).
In 2018, IBM generated $39.8 billion in revenue from social networking, mobile, analytics and cloud computing, which are called strategic priorities, accounting for about half of total revenue. Cloud computing revenue was $19.2 billion, up 12% year on year.
As for the performance outlook, IBM said that excluding certain items, it expected earnings per share for the whole year of 2019 to be at least $13.90. According to Refinitiv, analysts had expected IBM to earn $13.79 a share in 2019, excluding certain items. The companys free cash flow in 2019 is estimated at $12 billion, lower than FactSets estimate of $12.97 billion.
We believe that sustained growth in the Strategic Imperatives will restore IBMs organic growth in 2019, despite the current adverse winds, Noura Instinet analyst Jeffrey Kvaal wrote in a January 15 report.
IBM shares fell $1.3, or 1.05%, to close at $122.52 on Tuesday in regular trading on the New York Stock Exchange. In subsequent after-hours trading, IBM shares rose $9.03, or 6.73%, to $130.76. IBMs lowest share price in the past 52 weeks was $105.94 and its highest was $168.72. IBM shares have risen 7% since 2019. (small)
Source: Responsible Editor of Netease Science and Technology Report: Wang Fengzhi_NT2541