Search Share Prices
IBM falls despite posting first rise in revenue for 23 months
Tech-giant IBM closed out the 2017 calendar year with a rise in revenues for the first time in almost six years, but shares slipped in early trading after the firm warned that higher tax rates would eat away at its profits from the current trading year.
Revenue rose 3.6% to $22.54bn, beating analysts' estimates of $22.06bn, thanks in small part to a 30% jump in revenue from the firm's cloud business.
With gross margins retreating to 49.5%, IBM swung to a loss of $1.05bn from a profit of $5.5bn a year earlier, due to a $5.5bn charge related to US tax code reform, and adjusted earnings per share of $5.18 beat estimates by a single cent.
IBM forecast flat operating profits of $13.80 per share for 2018, falling short of market expectations of $13.92 per share, with an estimated operating tax rate of 16%, compared to the 12% rate seen in 2017.
"Tax will be a headwind in 2018," said chief financial officer James Kavanaugh on Friday.
He added that IBM looked to continually "maintain a high level of investment" throughout the year as it boosts its capabilities on high-margin "strategic imperatives" such as cloud, mobile, cybersecurity and data analytics.
As of 1520 GMT, shares had lost 3.54% to $163.18 each.