International Business Machines (IBM ) shares moved lower Thursday after its muted fourth quarter earnings while adding its name to the list of big tech companies slashing jobs in divisions around the world.
IBM said revenues for the three months ending in December were flat to last year at $16.7 billion and just ahead of the Street consensus forecast, but the 5.5% annual advance was the best in more than a decade. Adjusted earnings of $3.60 per share, a 7.5% increase from last year, essentially matched Street forecasts.
Revenues from Red Hat, the cloud computing group that IBM purchased for $34 billion in 2019, were up 10%, while software revenues rose 2.8% to $7.3 billion. Consulting revenues were up 0.5% to $4.8 billion.
Looking into the current year, IBM said its sees free cash flow in the region of $10.5 billion, a 12.9% improvement from last year, with revenues rising by a "mid-single digit" percentage from 2022 levels.
"Putting it all together, we are pleased with the fundamentals of our business and the progress we have made in executing our strategy," CFO Jim Kavanaugh told investors on a conference call late Wednesday. "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."
"For 2023, we again expect solid growth in our two most important measures of success: revenue and free cash flow," he added.
IBM shares were marked 3.8% lower in early Thursday trading to change hands at $135.42 each, a move that would trim the stock's six month gain to around 9.9%.
The group also said it will cut around 3,900 jobs, a figure that represents around 1.5% of its global workforce, a move it linked in part to last year's spin-off of Kyndryl and the divesting of its healthcare data business. IBM shed its legacy infrastructure business to focus on cloud computing growth in 2019.
IBM said it would take a $300 million hit from the headcount reduction.
Last week, Google parent Alphabet (GOOGL) unveiled plans to cut around 12,000 jobs from its global workforce, a move that swiftly followed plans from Microsoft (MSFT) to slash around 5% of its global workforce, and take a $1.2 billion charge against its second quarter earnings, as it looks to 'align costs' with customer demand.
Late last year, Amazon (AMZN) announced plans to reduce its global workforce by around 18,000, which began earlier this week, while Meta Platforms META revealed job cuts of around 11,000.
