IBM has reported 6 percent drop in fourth quarter revenue to $20.4 billion thought its cloud revenue rose 10 percent to $7.5 billion.
The 109-year-old technology company is preparing to split itself into two public companies and the namesake firm will focus on the so-called hybrid cloud, where companies use a combination of their own datacenters and leased resources to manage and process data.
IBM said it is confident of returning to sales growth in 2021 and expected revenue to grow in mid-single digits after the separation.
IBM’s revenue from Red Hat rose 19 percent.
IBM reported gross profit margin of 51.7 percent, up 70 basis points, during the quarter ended December 31, 2020.
IBM said it will achieve growth in 2021 without revealing specific percentage.
“We made progress in 2020 growing our hybrid cloud platform as the foundation for our clients’ digital transformations,” said Arvind Krishna, IBM chairman and chief executive officer. “The actions we are taking to focus on hybrid cloud and AI will take hold, giving us confidence we can achieve revenue growth in 2021.”
IBM’s full year revenue fell 5 percent to $73.6 billion. IBM’s cloud revenue increased 19 percent to $25.1 billion. Red Hat revenue increased 18 percent. Gross profit margin rose p 100 basis points in 2020.
IBM’s revenue from Cloud & Cognitive Software (includes Cloud & Data Platforms which includes Red Hat, Cognitive Applications and Transaction Processing Platforms) — fell 4.5 percent to $6.8 billion in Q4 2020.
Cloud & Data Platforms grew 9 percent led by Red Hat. Cognitive Applications revenue was flat, with growth in Security and IoT. Transaction Processing Platforms declined 24 percent. Cloud revenue rose 39 percent.
Revenue from IBM’s Global Business Services (includes Consulting, Application Management and Global Process Services) fell 2.7 percent to $4.2 billion, driven by declines in Application Management and Consulting. Global Process Services revenue grew. Cloud revenue rose 16 percent.
Revenue from IBM’s Global Technology Services (includes Infrastructure & Cloud Services and Technology Support Services) — dropped 5.5 percent to $6.6 billion.
Revenue from IBM’s Systems (includes Systems Hardware and Operating Systems Software) —decreased 17.8 percent to $2.5 billion, as a result of declines in all Systems Hardware platforms, reflecting the impact of product cycle dynamics.
Revenue from IBM’s Global Financing (includes financing and used equipment sales) dropped 4.8 percent to $286 million, reflecting the wind-down of OEM commercial financing.
“In 2020 we increased investment in our business across R&D and CAPEX, and since October, announced the acquisition of seven companies focused on hybrid cloud and AI,” said James Kavanaugh, IBM senior vice president and chief financial officer.