IBM shares jump after company reports 6% revenue growth in fourth quarter

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SVP and Director at IBM Research Arvind Krishna speaks on stage during the 2016 Wired Business Conference on June 16, 2016 in New York City.
Brian Ach | Wired | Getty Images

IBM shares jumped as much as 7% in extended trading on Monday after the software and services company said revenue climbed 6% in the fourth quarter.

Here’s how the company did:

  • Earnings: $3.35 per share, adjusted
  • Revenue: $16.7 billion

During the period, IBM spun out is managed infrastructure services business into Kyndryl. For IBM’s continuing operations, revenue rose 6% from a year earlier, the company said a statement. Part of the growth comes from sales to Kyndryl.

IBM executives have been telling investors of late to look for mid-single digit revenue growth. In the prior quarter, IBM’s revenue from continuing operations increased by 2%. The company showed its fastest revenue growth since the third quarter of 2011.

Net income in the fourth quarter jumped 72% from a year earlier to $2.33 billion increased, while gross margin narrowed to 56.9% from 58.9%.

IBM streamlined its reporting segments for the fourth quarter in conjunction with the Kyndryl separation. Its software business, formerly known as Cloud and Cognitive Software, generated $7.27 billion in revenue, up 8% from a year earlier.

Revenue in the consulting unit, previously named Global Business Services, rose 13% to $4.75 billion. The IBM infrastructure business, which includes hardware, was down 0.3% to $4.41 billion.

As of the close on Monday, IBM shares are down 4% since the start of the year, while the S&P 500 is down 8%.

In addition to completing the Kyndryl transaction, IBM announced during the period the acquisitions of Australian cloud consulting company SXiQ and a consulting unit that handles Adobe implementations. It also announced a vertical semiconductor transistor architecture alongside Samsung. 

Executives will discuss the results and expectations for the year with analysts on a conference call starting at 5 p.m. ET.

This is breaking news. Please check back for updates.

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