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What happened
Actions of IBM (NYSE: IBM) fell 9.9% on Friday, following the release of the tech giant’s fourth quarter results.
So what
IBM’s revenue fell 6% year-over-year to $ 20.4 billion. It was slightly below the nearly $ 20.7 billion expected by Wall Street.
IBM is streamlining its business to focus more on its cloud operations. However, the change is not progressing as well as many analysts had expected. IBM’s total cloud revenue only grew 10% to $ 7.5 billion, while competitors such as Amazon and Microsoft are expected to generate much more impressive cloud growth in their upcoming earnings reports.
IBM’s stock fell sharply on Friday. Image source: Getty Images.
Additionally, IBM’s adjusted operating income fell 56% to $ 2.07, primarily due to a $ 2 billion pre-tax charge related to its restructuring efforts. However, the company continued to generate cash. IBM’s free cash flow for the year 2020 was $ 10.8 billion.
Now what
IBM CEO Arvind Krishna asks investors to be patient as IBM executes its turnaround strategy, but the company’s lackluster cloud growth makes it harder for shareholders to remain optimistic. Many decided to sell their stocks on Friday rather than continue to wait for IBM’s growth to rebound.
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