Published January 21, 2014
IBM (IBM) reported a stronger-than-expected 6% increase in fourth-quarter profits on Tuesday even as the tech giant’s revenue fell for the seventh consecutive quarter amid weak hardware demand.
Shares of Big Blue lost ground in after-hours trading following the mixed results.
IBM said it earned $6.19 billion, or $5.73 a share, last quarter, compared with a profit of $5.83 billion, or $5.13 a share, a year earlier.
Excluding one-time items, the company grew profits 14% to $6.13 a share. That exceeded calls from analysts for $5.99.
Revenue fell 5.5% to $27.7 billion, missing the Street’s view of $28.25 billion. Gross profits ticked down to 51.7% from 51.8%. Non-GAAP margins expanded to 52.6% from 52.3%.
“We continued to drive strong results across much of our portfolio and again grew earnings per share in 2013,” IBM CEO Ginni Rometty said in a statement.
IBM said software sales increased 3% last quarter to $8.1 billion, helping to offset a 4% drop in global technology services revenue to $9.9 billion.
However, the company continues to struggle on the hardware front as sales tumbled 26% to $4.3 billion in the fourth quarter. Pre-tax income shrank to just $200 million from $968 million the year before.
Rometty said due to the company’s disappointing full-year results, the management team recommended it forgo personal annual incentive payments for 2013.
Looking ahead, IBM said it remains “on track” toward meeting its 2015 roadmap for operating EPS of at least $20.
Shares of Armonk, N.Y.-based IBM fell 1.02% to $186.51 in extended trading on Tuesday. IBM was the only losing member of the Dow Industrials in 2013, falling 2.1% versus a 25% rally for the benchmark index.