The years long loosing streak has been finally broken by IBM.
A slim but significant growth in revenues – 1 per cent, was recorded by IBM after making declining in sales for 22 consecutive quarter which is about five and half years.
The company expects that the growth in revenues would continue throughout the year.
“We are pleased with our overall revenue growth in the quarter,” said Ginni Rometty, IBM chairman, president and chief executive officer.
A radical change in the technology industry had resulted in IBM struggling in the last few years. But this quarter, the company has gained from its new investments in the cloud services and some of the other more dynamic and faster growing sectors of the tech industry.
In the fourth quarter there was an increase of 27 per cent in revenues of the company from its cloud business. Over one fifth of the total sales of the company was accounted for by the cloud unit of IBM.
The earnings per share for the entire year of 2017 announced by IBM was $13.80, barring some items, the company said in its statement. This value was about a penny less than what the market watchers had anticipated.
The revenue of the company from the cloud services was $17 billion and about $9.3 billion of that revenue was given as a service. The capital expenditures of the company for 2017 was 11 per cent higher compared to a year earlier at $3.31 billion.
The revenue from the Cognitive Solutions business was at $5.4 billion which was a 3 per cent growth year-on-year. And a 1 per cent growth was recorded by the Global Business Services unit of the company with revenues of $4.2 billion.
“During 2017, we strengthened our position as the leading enterprise cloud provider and established IBM as the blockchain leader for business,” Rometty said.
But investors appeared unconvinced about the future of the company and the impact of a 1 per cent growth in revenue s in one quarter can have on inducing a turnaround in the fortunes of the company. and this was reflected in the share price which saw a reduction of 4 per cent after the closure of the market on Thursday.
Negative comments about the company was recently made by one of the major shareholders of IBM. About one third of his stocks of the company were ditched by Warren Buffett, the investors said in May and added: “I don’t value IBM the same way that I did six years ago when I started buying.”
And just as a large number of U.S. corporate have reported this year, IBM have also said that it would take a one-time hit of $5.5 billion duet the tax law changes there. The company actually anticipates that its effective tax rate would increase in 2018 because it is a multinational company.
“The charge encompasses several elements, including a tax on accumulated overseas profits and the revaluation of deferred tax assets and liabilities,” the company said in the statement.
IBM had been sidelined by the much faster growing IT companies such as Amazon, Google and Microsoft.
(Adapted from Money.cnn.com & CNBC.com)