IBM beats Q4 2015 expectations, but shareholders don’t care

20 Jan 2016

IBM has posted its Q4 2015 results and, despite showing that it has surpassed market expectations, its shareholders have shown little optimism for 2016.

The IBM financial results showed, across the board, the company had surpassed expectations of revenue, which had been estimated to reach $22.04bn for the quarter, but actually achieved $22.06bn.

Likewise, the company achieved a slightly higher share expectation of $4.84 per share, compared with the previous estimate of $4.81 per share, but this has done little to appease the tech giant’s shareholders.

A few hours after the financial results were posted, Business Insider reported, IBM shares fell by as much as 3.5pc following what a flat trading pattern found on the stock market immediately after the earnings report.

For the entire year of 2015, IBM said it achieved its expectations, making $81.7bn in revenue, similarly falling in line with its full-year expected operating earnings per share (EPS) of $14.92.

Cloud now its dominant business

The reasoning behind the wariness of its shareholders is unsurprising given the fact it has missed its long-term expectations of $20 per share by 2015.

Compared with 2014, IBM’s revenues have fallen by as much as 9pc, with its share price dropping by a considerable 17pc from a 2014 share price of $5.81 per share.

By far, the company’s most profitable sector has been in its cloud business, where its revenues increased by 42pc on last year to $10.2bn, but IBM said it would have achieved a percentage increase of 57pc had there not been the need to adjust currencies and other investments it made.

When discussing the results, IBM’s CEO Ginni Rometty said: “We strengthened our existing portfolio while investing aggressively in new opportunities like Watson Health, Watson Internet of Things and hybrid cloud.

“As we transform to a cognitive solutions and cloud platform company, we are well positioned to continue delivering greater value to our clients and returning capital to our shareholders.”

IBM sign image via Tomasz Bidermann/Shutterstock

Colm Gorey was a senior journalist with Silicon Republic