IBM's Q4 solid, raises 2013 earnings outlook
Summary: Overall, IBM weathered sluggish IT spending well. Software revenue was up 3 percent; services sales fell 2 percent and systems and technology sales fell 1 percent.
IBM's fourth quarter was better than expected on both the bottom and top lines.
IBM reported fourth quarter earnings of $5.8 billion, or $5.13 a share, on revenue of $29.3 billion, down 1 percent from a year ago. Non-GAAP earnings were $5.39 a share.
Wall Street was expecting IBM to report fourth quarter earnings of $5.25 a share on revenue of $29.08 billion. For 2012, IBM reported earnings of $16.6 billion, or $14.37 a share, on revenue of $104.5 billion, down 2 percent from a year ago.
Overall, IBM weathered sluggish IT spending well. Software revenue was up 3 percent; services sales fell 2 percent and systems and technology sales fell 1 percent. System z mainframe sales were up 56 percent from a year ago.
On a conference call, IBM CFO Mark Loughridge said:
Our new hardware product introductions really performed in the quarter. We had excellent acceptance of our new mainframe and our System Z revenue was up 56% year to year, so it's been a very successful launch. Not only in major markets, but in growth markets where we were up 65%. And we had significant growth in our mainframe specialty engines led by Linux. This is a good indicator, not only of new work loads moving onto the platform, but also the value of a vertically integrated system.
For 2013, IBM projected GAAP earnings of $15.53 a share and non-GAAP earnings of at least $16.70 a share. Wall Street was looking for earnings of $16.63 a share.
By the numbers:
- Fourth quarter sales from Europe, Middle East and Africa fell 5 percent from a year ago to $9.1 billion. Asia-Pacific revenue in the fourth quarter was $7 billion, down 4 percent. Revenue in the fourth quarter from Brazil, Russia, India and China was up 11 percent.
- Global technology services revenue fell 2 percent in the fourth quarter and global business services sales were down 3 percent. Backlog was flat.
- Software sales in the fourth quarter was $7.9 billion, up 3 percent from a year ago. Pre-tax earnings in the quarter was up 8 percent from a year ago.
- Hardware revenue was $5.8 billion in the fourth quarter, down 1 percent from a year ago. Cloud revenue for 2012 was up 80 percent.
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Meanwhile, despite the rosy outlook,
It seems the corporate business model as it now exists can no longer sustain jobs, (at least not in the US), and will, in fact, become more of a detriment to our economy as time passes. There's no reason - and arguably no rationale - for the highest levels of corporate management to garner the inordinately high rewards they receive. (Are we stepping back to feudalism)? Too many are too impressed with themselves, as if they are the only ones on the planet who could possibly hold those positions. It's not like they do all the jobs by themselves. The "team" metaphor is more lie than truth. No one is indispensable, including management, (though they seem to think they are, and apparently have convinced others into believing it, too).
(That's my rant for the day).