U.S. Markets closed

Post Earnings Coverage as IBM's Earnings and Revenues Surpassed Market Expectations, as Cloud Revenue Jumped 33% in the Quarter

Upcoming AWS Coverage on NCR Corp. Post-Earnings Results

LONDON, UK / ACCESSWIRE / January 24, 2017 / Active Wall St. announces its post-earnings coverage on International Business Machines Corp. (NYSE: IBM). The Company released its fourth quarter and fiscal 2016 results on January 18, 2017. The technology and consulting Company's earnings per share increased 3.5% on a y-o-y basis. Register with us now for your free membership at:


One of International Business Machines' competitors within the Information Technology Services space, NCR Corp. (NYSE: NCR), will be releasing its Q4 and full year 2016 financial results after the market close today. A conference call is scheduled at 4:30 p.m. ET on the same day. AWS will be initiating a research report on NCR Corp. in the coming days.

Today, AWS is promoting its earnings coverage on IBM; touching on NCR. Get our free coverage by signing up to:



Earnings Reviewed

For the quarter ended on December 31, 2016, IBM's revenue fell 1.3% to $21.77 billion, but topped analysts' expectations of $21.64 billion. During the reported quarter, the Company generated $4.8 billion of operating net income, up 1.5% on a y-o-y basis, while its net income margin expanded by 60 basis points. For Q4 2016, IBM's net income edged up approximately 1% to $4.5 billion, with a sharp reduction of 2%. The Company's earnings per share of $5.01 was better by 3.5%, surpassing Wall Street's consensus estimates of $4.89 per share.

For FY16, IBM's diluted earnings per share from continuing operations were $12.39, down 9% compared to FY15. Net income from continuing operations for the twelve months ended December 31, 2016, was $11.9 billion, down 11% compared to $13.4 billion in the year-ago same period. The Company's revenues from continuing operations for the twelve-month period totaled $79.9 billion, down by 2% on a y-o-y basis compared to $81.7 billion for the twelve months of 2015.

Segment Results

During Q4 2016, IBM's Cognitive Solutions which includes solutions software and transaction processing software generated revenues of $5.3 billion, up 1.4%, or 2.2% on constant currency basis, driven by growth in cloud, analytics and security. During the reported quarter, the Company's Global Business Services which comprises consulting, global process services and application management recorded revenues of $4.1 billion, down 4.1% or 3.6% after adjusting for currency.

For Q4 2016, IBM's Technology Services & Cloud Platforms which consists of infrastructure services, technical support services, and integration software reported revenues of $9.3 billion, up 1.7% or 2.4% FX neutral basis. The segment's growth was driven by strong hybrid cloud services, analytics, and security performance. IBM's Systems which comprises systems hardware and operating systems software generated revenues of $2.5 billion, down 12.5%, or 12.1% on constant currency basis. The Company's Global Financing which includes financing and used equipment sales reported revenues of $447 million, down 1.5%, or 2.1% after adjusting for currency.

Strategic Imperatives: Cloud, Analytics, Security, and Mobile

During Q4 2016, IBM's cloud revenues increased 33%. The annual exit run rate for cloud as-a-service revenue increased to $8.6 billion from $5.3 billion at year-end 2015. Revenues from analytics increased 9%. Revenues from mobile increased 16%, or 17% adjusting for currency. The Company's revenues from security increased 7%, or 8% after adjusting for currency.

For FY16, Strategic imperatives revenue totaled $32.8 billion increased 13%, or up 14% adjusting for currency, and represents 41% of IBM's revenue. Cloud revenues increased 35% to $13.7 billion. The annual exit run rate for cloud as-a-service revenue increased 61%, or 63% after adjusting for currency on a y-o-y basis. Revenues from analytics increased 9%. Revenues from mobile increased 34%, or 35% on currency neutral basis, and revenues from security increased 13%.

Cash Flow and Balance Sheet

In Q4 2016, IBM generated net cash from operating activities of $3.2 billion, or $5.6 billion excluding Global Financing receivables. The Company also generated free cash flow of $4.7 billion during the reported quarter. IBM returned $1.3 billion in dividends and $0.9 billion of gross share repurchases to shareholders. At the end of December 2016, IBM had $5.1 billion remaining in the current share repurchase authorization.

The Company generated full-year free cash flow of $11.6 billion, excluding Global Financing receivables. IBM returned $8.8 billion to shareholders through $5.3 billion in dividends and $3.5 billion of gross share repurchases.

IBM ended Q4 2016 with $8.53 billion of cash on hand. Debt, including Global Financing debt of $27.9 billion, totaled $42.2 billion. Core (non-Global Financing) debt totaled $14.3 billion. IBM made 15 acquisitions in FY16, spending $5.7 billion.


For FY17, IBM expects non-GAAP operating diluted earnings per share of at least $13.80 and GAAP diluted earnings per share of at least $11.95. IBM expects a free cash flow realization rate in excess of 90% of GAAP net income.

Stock Performance

At the close of trading session on January 23, 2017, IBM's share price finished the trading session at $171.03, rising slightly by 0.28%. A total volume of 5.43 million shares exchanged hands, which was higher than the 3 months' average volume of 3.59 million shares. The stock has advanced 7.41% and 44.94% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have gained 3.04%. The stock is trading at a PE ratio of 13.94 and has a dividend yield of 3.27%.

Active Wall Street:

Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

AWS has not been compensated; directly or indirectly; for producing or publishing this document.


The non-sponsored content contained herein has been prepared by a writer (the "Author") and is fact checked and reviewed by a third party research service company (the "Reviewer") represented by a credentialed financial analyst, for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the "Sponsor"), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.


AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.


This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/.


For any questions, inquiries, or comments reach out to us directly. If you're a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: info@activewallst.com

Phone number: 1-858-257-3144

Office Address: 3rd floor, 207 Regent Street, London, W1B 3HH, United Kingdom

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Active Wall Street