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IBM Reports 2011 Fourth-Quarter and Full-Year Results

btarunr

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#1
IBM (NYSE: IBM) today announced fourth-quarter 2011 diluted earnings of $4.62 per share, compared with diluted earnings of $4.18 per share in the fourth quarter of 2010, an increase of 11 percent. Operating (non-GAAP) diluted earnings were $4.71 per share, compared with operating diluted earnings of $4.25 per share in the fourth quarter of 2010, an increase of 11 percent.

Fourth-quarter net income was $5.5 billion compared with $5.3 billion in the fourth quarter of 2010, an increase of 4 percent. Operating (non-GAAP) net income was $5.6 billion compared with $5.4 billion in the fourth quarter of 2010, an increase of 5 percent.

Total revenues for the fourth quarter of 2011 of $29.5 billion increased 2 percent (1 percent, adjusting for currency) from the fourth quarter of 2010. While currency provided a benefit to revenue growth of approximately 25 basis points in the quarter, currency movements since the company announced its third-quarter earnings in October impacted fourth-quarter revenue by approximately one point of growth, or $300 million.

"We had a strong fourth-quarter performance, capping a year of record earnings per share, revenue, profit and free cash flow," said Ginni Rometty, IBM president and chief executive officer. "We delivered outstanding results in all four of our strategic initiatives for the quarter and the year, as we continued to realize the benefit of our long-term investments in growth markets, business analytics, Smarter Planet solutions and cloud. We are well on track toward our long-term roadmap for operating earnings per share of at least $20 in 2015.”

Fourth-Quarter GAAP - Operating (non-GAAP) Reconciliation
Fourth-quarter operating (non-GAAP) diluted earnings exclude $0.09 per share of net charges: $0.10 per share for the amortization of purchased intangible assets and other acquisition-related charges, offset by ($0.01) per share for retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.

Full-Year 2012 Expectation
IBM said that it expects to deliver full-year 2012 GAAP earnings per share of at least $14.16; and operating (non-GAAP) earnings per share of at least $14.85. The 2012 operating (non-GAAP) earnings exclude $0.69 per share of charges for amortization of purchased intangible assets, other acquisition-related charges, and retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.

Geographic Regions
The Americas’ fourth-quarter revenues were $12.5 billion, an increase of 3 percent (3 percent, adjusting for currency) from the 2010 period. Revenues from Europe/Middle East/Africa were $9.6 billion, up 1 percent (1 percent, adjusting for currency). Asia-Pacific revenues increased 2 percent (down 1 percent, adjusting for currency) to $6.7 billion. OEM revenues were $714 million, down 9 percent compared with the 2010 fourth quarter.

Growth Markets
Revenues from the company’s growth markets increased 7 percent (8 percent, adjusting for currency). Revenues in the BRIC countries — Brazil, Russia, India and China — increased 10 percent (11 percent, adjusting for currency).

Services
Global Technology Services segment revenues increased 3 percent (3 percent, adjusting for currency) to $10.5 billion. Global Business Services segment revenues were up 3 percent (2 percent, adjusting for currency) at $4.9 billion.

Pre-tax income from Global Technology Services increased 18 percent; pre-tax margin increased to 18.0 percent. Global Business Services pre-tax income increased 14 percent; pre-tax margin increased to 16.6 percent.

The estimated services backlog at December 31 was $141 billion, up $4 billion as reported ($5 billion, adjusting for currency), quarter to quarter, and down $2 billion as reported (flat, adjusting for currency), year over year. Services backlog at the end of a quarter measures the current value of work under contract expected to be recognized as revenue in future quarters.

Software
Revenues from the Software segment were $7.6 billion, an increase of 9 percent (9 percent, adjusting for currency). Software pre-tax income of $3.7 billion increased 12 percent year over year.

Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Lotus and Rational products, were $5.2 billion, an increase of 11 percent (11 percent, adjusting for currency) versus the fourth quarter of 2010. Operating systems revenues of $710 million increased 3 percent (3 percent, adjusting for currency) compared with the prior-year quarter.

Revenues from the WebSphere family of software products increased 21 percent year over year. Information Management software revenues increased 9 percent. Revenues from Tivoli software increased 14 percent. Revenues from Lotus software decreased 2 percent, and Rational software increased 4 percent.

Hardware
Revenues from the Systems and Technology segment totaled $5.8 billion for the quarter, down 8 percent (8 percent, adjusting for currency) from the fourth quarter of 2010. Systems and Technology pre-tax income was $790 million, a decrease of 33 percent.

Total systems revenues decreased 7 percent (7 percent, adjusting for currency). Revenues from Power Systems increased 6 percent compared with the 2010 period. Revenues from System z mainframe server products decreased 31 percent compared with the year-ago period which was the first full quarter after a new product introduction. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), decreased 4 percent. Revenues from System x decreased 2 percent. Revenues from System Storage decreased 1 percent, and revenues from Retail Store Solutions increased 9 percent year over year. Revenues from Microelectronics OEM decreased 11 percent.

Financing
Global Financing segment revenues decreased 13 percent (13 percent, adjusting for currency) in the fourth quarter to $548 million. Pre-tax income for the segment decreased 9 percent to $514 million.

Fourth-Quarter 2011:
  • Diluted EPS:
    o GAAP: $4.62, up 11 percent;
    o Operating (non-GAAP): $4.71, up 11 percent;
  • Net income:
    o GAAP: $5.5 billion, up 4 percent;
    o Operating (non-GAAP): $5.6 billion, up 5 percent;
  • Gross profit margin:
    GAAP: 49.9 percent, up 0.9 points;
    Operating (non-GAAP): 50.2 percent, up 1.1 points;
  • Revenue of $29.5 billion, up 2 percent as reported, 1 percent adjusting for currency;
  • Software revenue up 9 percent;
  • Global Technology Services revenue up 3 percent;
  • Global Business Services revenue up 3 percent, 2 percent adjusting for currency;
  • Services backlog of $141 billion, up $4 billion as reported, up $5 billion adjusting for currency, quarter to quarter;
  • Systems and Technology revenue down 8 percent.
Full-Year 2011:
  • Diluted EPS, up double-digits for 9th consecutive year;
    o GAAP: $13.06, up 13 percent;
    o Operating (non-GAAP): $13.44, up 15 percent;
  • Net income:
    GAAP: $15.9 billion, up 7 percent;
    Operating (non-GAAP): $16.3 billion, up 9 percent;
  • Revenue of $106.9 billion, up 7 percent, up 3 percent adjusting for currency;
  • Free cash flow of $16.6 billion, up $300 million;
  • Growth markets revenue up 16 percent, up 11 percent adjusting for currency;
  • Business analytics revenue up 16 percent;
  • Smarter Planet revenue up 47 percent;
  • Cloud revenue more than tripled 2010 revenue.
Full-Year 2012 Expectation:
  • GAAP EPS of at least $14.16 and operating (non-GAAP) EPS of at least $14.85.
For more information, refer to the Earnings document(PDF).
 
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#2
As IBM is seen as a guage of how the wider technology and IT industry will perform this is all good news, especially as they are estimating growth for 2012.
 
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#4
A lot of giants are up: Intel, MS, IBM.. A good year.
 
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#5
They expect a $10 on the year improvement, or over 200% improvement? Wow.