IBM down in after hours trading following mixed earnings

IBM reported mixed earnings that, posting $$20.4B in revenue and $2.07 in operating EPS, compared to consensus estimates of $20.7B in revenue and $1.79 EPS. Yahoo Finance’s Jared Blikre to break down the details.

Video Transcript

SEANA SMITH: And we want to get to some breaking news. Sticking with the tech sector here, IBM is out with its earnings results. Jared Blikre has those numbers for us. Jared.

JARED BLIKRE: That's right. The stock is down about 4 and 1/2% right now, and that is off of a miss from the top line number coming in a little bit short. So revenue was $20.4 billion for the fourth quarter. Estimate was for slightly higher, $20.7 billion. But nevertheless, a miss. And it looks like losses-- or excuse me-- expectations not being met in the cloud and cognitive software division. Now, that came in at $6.84 billion, but the estimate was for materially higher-- materially higher. At some point, $2.6 billion.

Looking through the other segments here, it looks like just about everything was in line. Global business services revenue, $4.17 billion-- in line. Global technology services revenue, 6.57-- just a little bit-- I'd call that in line, too. Systems revenue, $2.5 billion. Estimate was for slightly lower. And then, here we have operating EPS of $2.07 for the quarter. The estimate was for quite a bit lower, $1.79, so a nice beat there.

And then, adjusted gross margin also coming in over about-- it looks like 130 basis points higher than expected at 52.5%. Total cloud revenue up $7 and 1/2 billion. That's up 10%. And RedHat revenue is up 19%. So, on the call, people are going to be interested in what the CEO, Arvind Krishna, has to say about the company's turnaround and what that miss might mean from that cloud division. So we're seeing that stock still down about 4 and 1/2% in after hours trading here.