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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:

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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:

http://www.activewallst.com/registration-3/?symbol=IBM

http://www.activewallst.com/registration-3/?symbol=NCR

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.

Outlook

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%.

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