The 109-year-old firm is preparing to split itself into two
public companies and the namesake firm will focus on the so-called hybrid
cloud, where companies use a combination of their own datacenters and leased
resources to manage and process data.
Revenue from its cloud-computing business rose 10 percent to
a record $7.5 billion in the fourth quarter, with IBM saying it is confident of
returning to sales growth in 2021 and expected revenue to grow in mid-single
digits after the separation.
That was not enough to convince investors, however, as the
company's shares dropped 6.7 percent to $122.98 in extended trading after IBM's
fourth consecutive quarter of sales decline.
"Our performance reflects the fact that our clients
continue to deal with the effects of the pandemic and broader uncertainty of
the macro environment," said Chief Executive Officer Arvind Krishna, who
took helm last April.
"This puts additional pressure on larger software
transactions this quarter and project delays in some services
engagements."
Sales from cloud and cognitive, which houses IBM's software
offerings and its biggest unit, declined 4.5 percent to $6.8 billion after two years of growth.
Still, Chief Financial Officer James Kavanaugh told Reuters
an accelerated move to cloud by businesses, a sales rebound in the global
business services unit and a weaker dollar make the company confident of
returning to revenue growth this year.
Total revenue fell 6.5 percent to $20.37 billion missing
analysts' average estimate of $20.67 billion, according to IBES data from
Refinitiv.
Excluding items, IBM earned $2.07 per share, above estimates
of $1.79.
© Reuters