IBM (IBM.US) shares dropped approximately 5.0% on Thursday despite the fact that the iconic tech company posted upbeat quarterly figures and plans to lay off 3,900 workers, which equals to 1.5% of its workforce, however some analysts expected a higher figure.
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Company earned $3.60 per share, which matched market consensus.
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Revenue of $16.69 billion was unchanged and beat Refinitiv estimates of $16.4 billion.
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Red Hat revenue, the cloud computing group that IBM acquired for $34 billion in 2019, jumped 10%, while software revenues rose 2.8% to $7.3 billion. Consulting revenues increased by 0.5% to $4.8 billion.
IBM reported the highest annual revenue growth in a decade, which is mainly boosted by its hybrid-cloud strategy. Source: IBM releases via Reuters
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"Putting it all together, we are pleased with the fundamentals of our business and the progress we have made in executing our strategy," said CFO Jim Kavanaugh. "Our 2022 performance demonstrates that we now have a higher growth, higher-value company with higher return on invested capital and a strong and growing free cash flow" Kavanaugh added.
Highlights of IBM's Q4 report. Source: Alpha Street
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Big Blue joins a slew of tech companies which are cutting costs by slashing its workforce amid rising recession fears.
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The 3900 layoffs are related to the spinoff of its Kyndryl business and a part of AI unit Watson Health. The move will cost the company about $300 million this quarter, a spokesperson confirmed.
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IBM expects free cash flow in the region of $10.5 billion in the current fiscal year, which is 12.9% higher compared to last year, with revenues rising by a "mid-single digit" percentage from 2022 levels.
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Analysts, on average, expected $9.18 billion of free cash flow and annual revenue growth of 1.2%, according to Bloomberg.
IBM (IBM.US) stock launched today’s session with a bearish price gap and quickly broke below major support zone around $137.65, which coincides with 23.6% Fibonacci retracement of the upward wave stated in March 2020 and 200 SMA (red line). If current sentiment prevails, downward correction may deepen towards next support at $128.60. Source: xStation5
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