IBM’s Cloud Services Are The Big Winner In Q4

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January 19, 2017 4:55pm NYSE:IBM

From International Business Machines Corp. (NYSE:IBM) late Thursday posted better than expected fourth quarter earnings results and offered a 2017 forecast above analysts’ view.

The Armonk, NY-based technology giant reported adjusted Q4 EPS of $5.01, which was $0.13 better than the Wall Street consensus estimate of $4.88. Revenues fell 1.3% from last year to $21.77 billion, but still beat analysts’ view for $21.63 billion.

IBM noted that its cloud services segment continued to be a standout. Revenues from that unit surged 33% in the latest period.

Looking ahead, IBM forecast full year 2017 EPS of at least $13.80, excluding special items. That total would beat the current $13.74 EPS estimate from Wall Street analysts.

The company commented via press release:

“In 2016, our strategic imperatives grew to represent more than 40 percent of our total revenue and we have established ourselves as the industry’s leading cognitive solutions and cloud platform company,” said Ginni Rometty, IBM chairman, president and chief executive officer. “IBM Watson is the world’s leading AI platform for business, and emerging solutions such as IBM Blockchain are enabling new levels of trust in transactions of every kind. More and more clients are choosing the IBM Cloud because of its differentiated capabilities, which are helping to transform industries, such as financial services, airlines and retail.”

Despite the seemingly solid numbers and outlook, International Business Machines shares fell $3.51 (-2.10%) to $163.30 in after-hours trading on Thursday. Prior to today’s report, IBM had gained 0.49% year-to-date, versus a 1.06% rise in the benchmark S&P 500 index during the same period.

IBM currently has a POWR Rating of A (Strong Buy), and is ranked #2 of 24 stocks in the Technology – Hardware category.

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