Big Blue takes $5.5 billion charge on tax overhaul law
International Business Machines Corp. shares shed gains it had built up over the week in the extended session Thursday after the computer giant modestly topped Wall Street estimates for the quarter and returned to revenue growth.
IBM IBM, +0.28% shares fell 4.2% to $162 after hours, following a 0.3% gain for the regular session and a 3.7% advance for the week. Shares closed Thursday up 10% year to date. In comparison, the Dow Jones Industrial Average DJIA, -0.37% is up 5.3% for the year and the S&P 500 index SPX, -0.16% is up 4.7%
For the fourth quarter, Big Blue reported a loss of $1.05 billion, or $1.14 a share, compared with net income of $4.5 billion, or $4.72 a share, in the year-ago period. The company booked a one-time charge of $5.5 billion from recently-passed tax legislation. Adjusted earnings were $5.18 a share.
Among the analysts surveyed by FactSet, IBM was expected to report adjusted consensus earnings of $5.17 a share, while Estimize, a software platform that uses crowdsourcing from hedge-fund executives, brokerages, buy-side analysts and others, called for an adjusted earnings consensus of $5.20 a share.
Revenue rose to $22.54 billion from $21.77 billion in the year-ago period, snapping a 22-quarter streak of revenue declines. Analysts surveyed by FactSet had estimated adjusted earnings of $5.17 a share on revenue of $22.05 billion. Estimize had expected revenue of $21.98 billion.
“Our strategic imperatives revenue again grew at a double-digit rate and now represents 46 percent of our total revenue, and we are pleased with our overall revenue growth in the quarter,” said Ginni Rometty, IBM chairman, president and chief executive, in a statement.
“During 2017, we strengthened our position as the leading enterprise cloud provider and established IBM as the blockchain leader for business,” Rometty said. “Looking ahead, we are uniquely positioned to help clients use data and AI to build smarter businesses.”
IBM reported that technology services and cloud-platform revenue declined 1.2% to $9.2 billion, while analysts had forecast $9.15 billion. Cognitive-solutions revenue rose 2.5% to $5.43 billion from the year-ago quarter, just short of the $5.45 billion analyst consensus. Global business services revenue rose 0.8% to $4.15 billion while analysts were looking for $4.1 billion.
Systems revenue, which includes systems hardware and operating-systems software, jumped 32% to $3.33 billion from the year-ago period, while Wall Street was expecting $2.82 billion.