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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
International Business Machines Corporation | LSE:IBM | London | Ordinary Share | COM STK USD0.20 (CDI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 118.95 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Computer Communication Equip | 61.86B | 7.5B | 8.1833 | 20.32 | 152.43B |
TIDMIBM
IBM (NYSE:IBM)
Continued Strong Growth in Strategic Imperatives Led by IBM Cloud
Highlights
-- Diluted EPS from continuing operations: GAAP of $1.85; Operating
(non-GAAP) of $2.38
-- Revenue from continuing operations of $18.2 billion -- Strategic imperatives revenue of $7.8 billion in the quarter, up 12
percent (up 13 percent adjusting for currency)
-- Strategic imperatives revenue of $33.6 billion over the last 12 months
represents 42 percent of IBM revenue
-- Cloud revenue of $14.6 billion over the last 12 months--
Cloud as-a-Service annual exit run rate of $8.6 billion in the
quarter, up 59 percent year to year (up 61 percent adjusting for
currency)
-- Maintains full-year EPS and free cash flow expectations.
IBM (NYSE:IBM) today announced first-quarter earnings results.
"In the first quarter, both the IBM Cloud and our cognitive solutions again grew strongly, which fueled robust performance in our strategic imperatives," said Ginni Rometty, IBM chairman, president and chief executive officer. "In addition, we are developing and bringing to market emerging technologies such as blockchain and quantum, revolutionizing how enterprises will tackle complex business problems in the years ahead."
FIRST QUARTER 2017 Gross Profit Diluted EPS Net Income Margin GAAP from Continuing Operations $1.85 $1.8B 42.8% Year/Year -11% -13% -3.7Pts Operating (Non-GAAP) $2.38 $2.3B 44.5% Year/Year 1% -1% -3.0Pts Strategic REVENUE Total IBM Imperatives Cloud As reported (US$) $18.2B $7.8B $3.5B Year/Year -3% 12% 33% Year/Year adjusting for currency -2% 13% 35%
"We continued to make investments in the first quarter to expand our cognitive and cloud platform and we increased our research and development spending," said Martin Schroeter, IBM senior vice president and chief financial officer. "At the same time we returned more than $2.6 billion to shareholders through dividends and gross share repurchases."
Strategic Imperatives
First-quarter cloud revenues increased 33 percent (up 35 percent adjusting for currency) to $3.5 billion. Cloud revenue over the last 12 months was $14.6 billion. The annual exit run rate for cloud as-a-service revenue increased to $8.6 billion from $5.4 billion in the first quarter of 2016. Revenues from analytics increased 6 percent (up 7 percent adjusting for currency). Revenues from mobile increased 20 percent (up 22 percent adjusting for currency) and revenues from security increased 9 percent (up 10 percent adjusting for currency).
Full-Year 2017 Expectations
The company continues to expect operating (non-GAAP) diluted earnings per share of at least $13.80 and GAAP diluted earnings per share of at least $11.95. Operating (non-GAAP) diluted earnings per share exclude $1.85 per share of charges for amortization of purchased intangible assets, other acquisition-related charges and retirement-related charges. IBM continues to expect free cash flow to be relatively flat year to year.
Cash Flow and Balance Sheet
In the first quarter, the company generated net cash from operating activities of $4.0 billion, or $1.9 billion excluding Global Financing receivables. IBM's free cash flow was $1.1 billion, down year to year consistent with the amount of the Japan tax refund received in the first quarter of 2016. IBM returned $1.3 billion in dividends and $1.3 billion of gross share repurchases to shareholders. At the end of March 2017, IBM had $3.8 billion remaining in the current share repurchase authorization.
IBM ended the first quarter of 2017 with $10.7 billion of cash on hand. Debt, including Global Financing debt of $28.5 billion, totaled $42.8 billion. Core (non-Global Financing) debt totaled $14.3 billion. The balance sheet remains strong and is well positioned to support the business over the long term.
Segment Results for First Quarter
-- Cognitive Solutions (includes Solutions Software and Transaction
Processing Software) -- revenues of $4.1 billion, up 2.1 percent
(up 2.8 percent adjusting for currency) were driven by growth in
analytics and security, which include Watson-related offerings.
-- Global Business Services (includes Consulting, Global Process
Services and Application Management) -- revenues of $4.0 billion,
down 3.0 percent (down 1.9 percent adjusting for currency). Strategic
imperatives grew double digits led by the cloud and mobile practices.
-- Technology Services & Cloud Platforms (includes
Infrastructure Services, Technical Support Services and Integration
Software) -- revenues of $8.2 billion, down 2.5 percent (down 2.0
percent adjusting for currency) with strong growth in strategic
imperatives driven by hybrid cloud services.
-- Systems (includes Systems Hardware and Operating Systems Software)
-- revenues of $1.4 billion, down 16.8 percent (down 16.1 percent
adjusting for currency).
-- Global Financing (includes financing and used equipment sales) --
revenues of $405 million, down 1.2 percent (down 2.1 percent adjusting
for currency).
Tax Rate
For the first quarter, IBM's ongoing effective GAAP tax rate was approximately 12percent. The ongoing effective operating (non-GAAP) tax rate was approximately 15 percent, which is within the expected range of 15 percent plus or minus 3 points provided earlier this year. IBM's reported tax rates include the effect from a discrete tax benefit disclosed earlier this year.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the following: a downturn in economic environment and client spending budgets; the company's failure to meet growth and productivity objectives, a failure of the company's innovation initiatives; risks from investing in growth opportunities; failure of the company's intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; cybersecurity and data privacy considerations; fluctuations in financial results, impact of local legal, economic, political and health conditions; adverse effects from environmental matters, tax matters and the company's pension plans; ineffective internal controls; the company's use of accounting estimates; the company's ability to attract and retain key personnel and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; reliance on third party distribution channels and ecosystems; the company's ability to successfully manage acquisitions, alliances and dispositions; risks from legal proceedings; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company's Form 10-Qs, Form 10-K and in the company's other filings with the U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. The company assumes no obligation to update or revise any forward-looking statements.
Presentation of Information in this Press Release
In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information which management believes provides useful information to investors:
IBM results --
-- presenting operating (non-GAAP) earnings per share amounts and related
income statement items;
-- adjusting for free cash flow; -- adjusting for currency (i.e., at constant currency).
Free cash flow guidance is derived using an estimate of profit, working capital and operational cash outflows. The company views Global Financing receivables as a profit-generating investment, which it seeks to maximize and therefore it is not considered when formulating guidance for free cash flow. As a result, the company does not estimate a GAAP Net Cash from Operations expectation metric.
The rationale for management's use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8-K that includes this press release and is being submitted today to the SEC.
Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. EDT, today. The webcast may be accessed via a link at http://www.ibm.com/investor/events/earnings/1q17.html. Presentation charts will be available shortly before the webcast.
Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).
INTERNATIONAL BUSINESS MACHINES CORPORATION COMPARATIVE FINANCIAL RESULTS (Unaudited; Dollars in millions except per share amounts) Three Months Ended March 31, 2017 2016 REVENUE Cognitive Solutions $ 4,062 $ 3,979 Global Business Services 4,006 4,131 Technology Services & Cloud Platforms 8,216 8,424 Systems 1,395 1,675 Global Financing 405 410 Other 71 66 TOTAL REVENUE 18,155 18,684 GROSS PROFIT 7,772 8,686 GROSS PROFIT MARGIN Cognitive Solutions 77.3 % 82.0 % Global Business Services 23.6 % 25.8 % Technology Services & Cloud Platforms 38.9 % 40.9 % Systems 47.5 % 57.2 % Global Financing 31.8 % 42.4 % TOTAL GROSS PROFIT MARGIN 42.8 % 46.5 % EXPENSE AND OTHER INCOME S,G&A 5,152 6,012 R,D&E 1,533 1,458 Intellectual property and custom development income (445 ) (217 ) Other (income) and expense (28 ) 253 Interest expense 135 147 TOTAL EXPENSE AND OTHER INCOME 6,348 7,652 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 1,424 1,034 Pre-tax margin 7.8 % 5.5 % Provision for / (Benefit) from income taxes (329 ) (983 ) Effective tax rate -23.1 % * -95.1 % INCOME FROM CONTINUING OPERATIONS $ 1,753 $ 2,016 DISCONTINUED OPERATIONS Income/(Loss) from discontinued (3 ) (3 ) operations, net of taxes NET INCOME $ 1,750 $ 2,014 EARNINGS PER SHARE OF COMMON STOCK: Assuming Dilution Continuing Operations $ 1.85 $ 2.09 Discontinued Operations $ 0.00 $ 0.00 TOTAL $ 1.85 $ 2.09 Basic Continuing Operations $ 1.86 $ 2.09 Discontinued Operations $ 0.00 $ 0.00 TOTAL $ 1.86 $ 2.09 WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M's): Assuming Dilution 947.8 964.4 Basic 942.4 961.7 *Reflects adoption of the FASB guidance on intra-entity transfers of assets INTERNATIONAL BUSINESS MACHINES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) At At (Dollars in Millions) March 31, December 31, 2017 2016 ASSETS: Current Assets: Cash and cash equivalents $ 10,096 $ 7,826 Marketable securities 599 701 Notes and accounts receivable 8,377 9,182 - trade, net Short-term financing receivables, net 16,362 19,006 Other accounts receivable, net 1,130 1,057 Inventory 1,609 1,553 Prepaid expenses and 4,715 4,564 other current assets Total Current Assets 42,889 43,888 Property, plant and equipment, net 10,865 10,830 Long-term financing receivables, net 8,502 9,021 Prepaid pension assets 3,491 3,034 Deferred taxes 6,457 5,224 Goodwill and intangibles, net 40,743 40,887 Investments and sundry assets 4,549 4,585 Total Assets $ 117,495 $ 117,470 LIABILITIES: Current Liabilities: Taxes $ 2,747 $ 3,235 Short-term debt 8,340 7,513 Accounts payable 5,324 6,209 Deferred income 12,351 11,035 Other liabilities 7,719 8,283 Total Current Liabilities 36,481 36,275 Long-term debt 34,441 34,655 Retirement related obligations 16,967 17,070 Deferred income 3,557 3,600 Other liabilities 7,601 7,477 Total Liabilities 99,047 99,078 EQUITY: IBM Stockholders' Equity: Common stock 54,104 53,935 Retained earnings 153,292 152,759 Treasury stock -- at cost (160,359 ) (159,050 ) Accumulated other comprehensive (28,710 ) (29,398 ) income/(loss) Total IBM stockholders' equity 18,327 18,246 Noncontrolling interests 121 146 Total Equity 18,448 18,392 Total Liabilities and Equity $ 117,495 $ 117,470 INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW ANALYSIS (Unaudited) Three Months Ended (Dollars in Millions) March 31, 2017 2016 Net Cash Provided by Operating $ 3,955 $ 5,530 * ** Activities per GAAP: Less: change in Global Financing (GF) Receivables 2,047 2,236 * Capital Expenditures, Net (819 ) (971 ) Free Cash Flow 1,088 2,323 ** Acquisitions (109 ) (2,590 ) Divestitures (1 ) 47 Dividends (1,321 ) (1,250 ) Share Repurchase (1,293 ) (939 ) Non-GF Debt 244 5,871 Other (includes GF Receivables 3,560 3,212 ** and GF Debt) Change in Cash, Cash Equivalents and Short-term Marketable Securities $ 2,168 $ 6,674 * Revised classification of certain financing receivables ** Reclassified to reflect adoption of the FASB guidance on stock-based compensation INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW (Unaudited) Three Months Ended (Dollars in Millions) March 31, 2017 2016 Net Income from Operations $ 1,750 $ 2,014 Depreciation/Amortization of Intangibles 1,098 1,025 Stock-based Compensation 129 133 Working Capital / Other (1,070 ) 123 ** Global Financing A/R 2,047 2,236 * Net Cash Provided by Operating Activities $ 3,955 $ 5,530 * ** Capital Expenditures, net (819 ) (971 ) of payments & proceeds Divestitures, net of cash transferred (1 ) 47 Acquisitions, net of cash acquired (109 ) (2,590 ) Marketable Securities / 1,278 1,628 * Other Investments, net Net Cash Used in Investing Activities $ 350 ($1,886 ) * Debt, net of payments & proceeds 476 4,963 Dividends (1,321 ) (1,250 ) Common Stock Repurchases (1,293 ) (939 ) Common Stock Transactions - Other 4 32 ** Net Cash Used in Financing Activities ($2,134 ) $ 2,806 ** Effect of Exchange Rate changes on Cash 100 217 Net Change in Cash & Cash Equivalents $ 2,270 $ 6,668 * Revised classification of certain financing receivables ** Reclassified to reflect adoption of the FASB guidance on stock-based compensation INTERNATIONAL BUSINESS MACHINES CORPORATION SEGMENT DATA (Unaudited) FIRST - QUARTER 2017 Cognitive Solutions & Industry Services Technology Global Services & (Dollars Cognitive Business Cloud Global in Millions) Solutions Services Platforms Systems Financing Revenue External $ 4,062 $ 4,006 $ 8,216 $ 1,395 $ 405 Internal 716 86 160 167 363 Total $ 4,778 $ 4,092 $ 8,376 $ 1,562 $ 768 Segment Revenue Pre-tax 1,274 291 687 (186 ) 311 Income from Continuing Operations Pre-tax 26.7 % 7.1 % 8.2 % (11.9 )% 40.5 % margin Change 2.1 % (3.0 )% (2.5 )% (16.8 )% (1.2 )% YTY Revenue - External Change 2.8 % (1.9 )% (2.0 )% (16.1 )% (2.1 )% YTY Revenue - External @constant currency FIRST - QUARTER 2016 Cognitive Solutions & Industry Services
Technology Global Services & (Dollars Cognitive Business Cloud Global in Millions) Solutions Services Platforms Systems Financing Revenue External $ 3,979 $ 4,131 $ 8,424 $ 1,675 $ 410 Internal 668 113 165 212 486 Total $ 4,647 $ 4,245 $ 8,589 $ 1,888 $ 896 Segment Revenue Pre-tax 1,013 190 258 (10 ) 386 Income from Continuing Operations Pre-tax 21.8 % 4.5 % 3.0 % (0.5 )% 43.1 % margin INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts) FIRST - QUARTER 2017 CONTINUING OPERATIONS Acquisition- Retirement- Related Related Operating GAAP Adjustments* Adjustments** (Non-GAAP) Gross $ 7,772 $ 119 $ 193 $ 8,083 Profit Gross 42.8 % 0.7Pts 1.1Pts 44.5 % Profit Margin S,G&A 5,152 (139 ) (136 ) 4,877 R,D&E 1,533 - (49 ) 1,484 Other (28 ) (4 ) - (31 ) (Income) & Expense Total Expense 6,348 (143 ) (185 ) 6,020 & Other (Income) Pre-tax 1,424 262 378 2,063 Income from Continuing Operations Pre-tax 7.8 % 1.4Pts 2.1Pts 11.4 % Income Margin from Continuing Operations Provision (329 ) 67 70 (192 ) for / (Benefit) from Income Taxes*** Effective (23.1 )% 7.6Pts 8.7Pts (9.3 )% Tax Rate Income from 1,753 195 308 2,255 Continuing Operations Income 9.7 % 1.1Pts 1.7Pts 12.4 % Margin from Continuing Operations Diluted $ 1.85 $ 0.21 $ 0.32 $ 2.38 Earnings Per Share: Continuing Operations FIRST - QUARTER 2016 CONTINUING OPERATIONS Acquisition- Retirement- Related Related Operating GAAP Adjustments* Adjustments** (Non-GAAP) Gross $ 8,686 $ 112 $ 79 $ 8,877 Profit Gross 46.5 % 0.6Pts 0.4Pts 47.5 % Profit Margin S,G&A 6,012 (67 ) (55 ) 5,890 R,D&E 1,458 - (9 ) 1,449 Other 253 (6 ) - 247 (Income) & Expense Total Expense 7,652 (73 ) (63 ) 7,516 & Other (Income) Pre-tax 1,034 185 142 1,361 Income from Continuing Operations Pre-tax 5.5 % 1.0Pts 0.8Pts 7.3 % Income Margin from Continuing Operations Provision (983 ) 47 27 (909 ) for / (Benefit) from Income Taxes*** Effective (95.1 )% 18.2Pts 13.8Pts (66.8 )% Tax Rate Income from 2,016 138 115 2,270 Continuing Operations Income 10.8 % 0.7Pts 0.6Pts 12.1 % Margin from Continuing Operations Diluted $ 2.09 $ 0.14 $ 0.12 $ 2.35 Earnings Per Share: Continuing Operations * Includes amortization of purchased intangible assets, in process R&D, severance cost for acquired employees, vacant space for acquired companies, deal costs and acquisition integration tax charges. ** Includes retirement-related interest cost, expected return on plan assets, recognized actuarial losses or gains, amortization of transition assets, other settlements, curtailments, multi-employer plans and insolvency insurance. *** Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As Reported pre-tax income under ASC 740, which employs an annual effective tax rate method to the results. INTERNATIONAL BUSINESS MACHINES CORPORATION RECONCILIATION OF OPERATING EARNINGS PER SHARE (Unaudited) 2017 EPS Guidance Expectations IBM GAAP EPS at least $11.95 IBM Operating EPS (non-GAAP) at least $13.80 Adjustments Acquisition related charges * $0.75 Non-Operating Retirement-Related Items $1.10 * Includes acquisitions through March 31, 2017
IBMIan Colley, 914-434-3043colley@us.ibm.comorJohn Bukovinsky, 732-618-3531jbuko@us.ibm.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170418006547/en/
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(END) Dow Jones Newswires
April 19, 2017 02:00 ET (06:00 GMT)
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