IBM's fourth-quarter net income grew 6 per cent, surpassing Wall Street's expectations even though revenue declined. Its shares fell in extended trading after the results came out - and CEO Ginni Rometty said she's recommending that senior executives, including herself, forgo personal bonuses for the year.
IBM Corp. said on Tuesday that it earned $6.19 billion, or $5.73 per share, in the October-December period. That's up from $5.83 billion, or $5.13 per share, in the same period a year earlier. Results benefited from tax audit settlements that lowered IBM's tax rate to 11.2 per cent in the quarter, from 25.5 per cent a year earlier.
IBM's adjusted earnings were $6.13 per share in the latest quarter.
Revenue fell 5.5 per cent to $27.7 billion from $29.3 billion.
Analysts, on average, had expected adjusted earnings of $5.99 per share on revenue of $28.27 billion, according to FactSet.
IBM is the world's largest technology-services company. Its results provide a gauge of businesses' appetite for technology spending. The company's business has been fairly stable because many of its customers sign long-term contracts that guarantee regular revenue, even when the economy is tough. It also helps that IBM no longer has a direct connection to the slumping PC industry.
Hardware revenue plunged 26 per cent to $4.26 billion in the fourth quarter. Revenue in the company's biggest business - services - slipped 3.6 per cent to $9.92 billion, while software revenue increased 2.8 per cent to $8.14 billion.
The Armonk, N.Y., company is forecasting 2014 adjusted earnings of at least $18 per share. Analysts expect $18.02 per share.
Rometty said IBM remains "on track" toward its adjusted earnings goal of at least $20 in 2015.
For the full year, IBM earned $16.5 billion, or $14.94 per share, compared with earnings of $16.6 billion, or $14.37 per share, in 2012. Adjusted earnings were $16.28 per share. Revenue fell 5 per cent to $99.8 billion from $104.5 billion.
IBM's shares fell $5.68, or 3 per cent, to $182.75 in after-hours trading. The stock had closed down $1.66 at $188.43 earlier.