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Author: Alan LittleDate: 2021-01-25

IBM (IBM) -10%, Intel (INTC) -9% after Friday’s Q4 reports

IBM (IBM) traded sharply lower on Friday after a revenue miss and Intel (INTC) also declined despite posting a strong Q4 report, as general tech stocks struggled.

International Business Machines (IBM) said that it expects to deliver “sustainable” revenue growth in the future, but a top-line miss in Q4 sent shares 10% lower on Friday amid broader declines for the tech sector.

Before the final session of the week, IBM posted $2.07 adjusted earnings per share and $20.37bn revenue versus the $1.79 and $20.67bn Wall Street consensus.

Earnings and revenue declined 56% and 6% year over year, respectively, as IBM struggled in what it deemed a “difficult” operating environment.

Cloud revenues were a bright spot though, rising 10% to a record $7.5bn.

CEO Arvind Krishna said that IBM had to face up to “many challenges” last year, but had made “good progress overall”.

He added: “In 2021, and we believe you will see that progress showing up in our results. With that said, we know it’s not necessarily going to be a straight line.”

IBM told investors in a call that its legacy Managed Infrastructure Services (MIS) unit would be spun off by late 2021, paving the way for 4-6% revenue growth thereafter.

Credit Suisse analyst Matthew Cabral said that there was still “meaningful work” required to support the turnaround, though there were green shoots of recovery already.

He added that IBM is undervalued when compared to its opportunity to thrive in a “hybrid-first” world.

Investors were not enthusiastic on Friday though, as IBM shares cratered out of the gate and eventually closed 9.91% down at $118.61.

Intel (INTC) also fell 9%, despite the semiconductor company posting a strong Q4 report.

Intel’s $1.52 per share earnings beat forecasts by 42 cents, while $20bn revenues easily surpassed the $17.5bn expectations

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