IBM revenue rises after 22 quarters of dwindling earnings

IBM -4.4% despite beating Q4 estimates, posting first revenue growth in nearly 6 years

For instance, IBM reported a fourth quarter net loss of $1.14 a share due to a one-time charge of $5.5 billion tied to USA tax reform. That bill also included "the revaluation of deferred tax assets and liabilities", we're told. Including that charge, the tax rate for the quarter was 124%, and it was 49% for all of 2017.

Analysts expected some growth in revenue during the fourth quarter to be generated from sales of the z14 mainframe computer, and that took place during the entire quarter.

The Armonk, N.Y. -based tech giant reported $22.5 billion in revenue for the fourth quarter, a 4 percent increase from $21.8 billion the company posted during the same period in 2016. Cloud revenue over the last 12 months was $17.0 billion, including $9.3 billion delivered as-a-service and $7.8 billion for hardware, software and services to enable IBM clients to implement comprehensive cloud solutions.

IBM's shares are trading down almost 4% in the after-hours session Thursday at $162.44 in a 52-week range of $139.13 to $182.79.

IBM has been moving away from its shrinking hardware and software businesses to what it calls "strategic imperatives", which includes the contribution of cloud computing - where companies use a remote network of data centres instead of their own hardware to cut costs.

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The company forecast stable margins and revenue growth for 2018, buoyed by growth in its newer businesses such as cloud computing and security services.

"Over the past several years we have invested aggressively in technology and our people to reposition IBM", James Kavanaugh, IBM's new chief financial officer, said in a statement Thursday after the company reported its fourth-quarter earnings. This is compared to analyst expectations of $5.17.

During a conference call, IBM said that it is expecting its earnings per share to be a minimum of $13.80 during 2018, excluding special items. Analysts are looking for first-quarter EPS of $2.28 and revenues of $18.42. The company will have an annual effective tax rate of 16 percent, plus or minus 2%, inclusive of the tax reform, Kavanaugh said.

Net income was $5.8bn including the tax write-down, but otherwise would have been $12.9bn (non-GAAP). This is the first year-over-year increase since the first quarter of 2012, just after Rometty became CEO. Shares fell after hours, from $169.12 at market close to below $164 at the time of this publication. IBM collectively refers to the new business operations as strategic imperatives. Virtually all data centers have at least one mainframe-and mostly from IBM-to handle large-scale transactions, such as banking transactions, customer billing and records and loan applications. But the company didn't announce any specific adjustments. "What I am interested in with IBM is its "strategic imperatives" which includes cloud, analytics and mobility".

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