IBM Q4 edges expectations, as-a-service run rate now $10.3 billion

IBM Net Common Payout Yield data by YCharts

Strategic imperatives revenue grew 17% year over year to $11.1 billion in the fourth quarter.

Revenues in the Americas climbed by four per cent in Q4, but EMEA continued to put a drag on sales, as revenues dipped by 1.5 per cent.

"IBM broke its streak of 22 quarters of lack of revenue growth, but I was never focused on that, because the company drives a lot of legacy technology", Moorhead told eWEEK in a media advisory.

The company's shares dropped 4.3 per cent in after-hours trading.

The company attributed stronger than expected growth in cloud computing and demand for IT security software and services for its performance. The company had revenue of $22.54 billion for the quarter, compared to the consensus estimate of $22.03 billion.

When Ms. Rometty took the CEO reins from Samuel Palmisano in January 2012, revenue started slipping nearly immediately and the threat of cloud computing to IBM's traditional businesses became evident.

The company will discuss 2018 expectations during today's quarterly earnings conference call.

"IBM reported a noisy quarter that will broadly underwhelm investors (for now) given steady revenue headwinds and gross-margin declines across the board", RBC Capital Markets analyst Amit Daryanani said in a research note to clients.

IBM has been repositioning for businesses such as Watson, cloud and security. For its 2017 full year, IBM has earnings per share of $13.80, excluding special items.

Revenue: $22.5 billion vs. $22.06 billion as expected by analysts, according to Thomson Reuters.

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In its full-year financial results, IBM highlighted $36.5 billion in earnings from "strategic imperatives", which encompass the company's newer initiatives like artificial intelligence, cloud computing and data analytics.

International Business Machines Corporation (IBM) is a technology company.

The revenue turnaround wasn't a surprise, given the anticipated boost from sales of IBM's new z14 mainframe, which shipped last summer.

James Kavanaugh, SVP and CFO, IBM says, "Over the past several years we have invested aggressively in technology and our people to re-position IBM".

Cognitive Solutions (includes solutions software and transaction processing software) - revenues of $5.4 billion, up 3 percent (flat adjusting for currency), driven by security and transaction processing software.

However, IBM still filed a fourth-quarter net loss of $1.05 billion as a result of taxes imposed by its repatriation of overseas profits - just as Apple has more recently done.

"While the December-quarter execution was suboptimal, we are sticking with our outperform rating, as we think risk/reward remains attractive", wrote Daryanani, who lowered his price target on IBM to 180 from 183.

However, the company's report was skewed thanks to the recent tax overhaul enacted by President Trump, as a chunk of IBM's profits have traditionally been kept outside of domestic corporate tax laws set at 35%.

"We're moving our whole services platform onto the IBM cloud and that's going to deliver us the scale we need to deliver SaaS as efficiently as possible", he said. Gross margins for its Global Business Services (GBS) unit fell by two points year over year, according to the firm, due to "currency dynamics" during the quarter as well as costs incurred through streamlining its practices across digital, cognitive and cloud.

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