Introduction:

IBM reported its fourth quarter earnings on Wednesday, beating analyst consensus expectations with profit coming in at $3.60 per share on revenue of $16.7 billion. However, the company also announced layoffs, cutting 1.5% of its workforce, or about 3,900 jobs, resulting in a $300 million cost. In this blog post, we will take a closer look at IBM’s Q4 performance and the reaction of Wall Street analysts.

IBM's Q4 Earnings Hit or miss.
IBM’s Q4 Earnings

IBM’s Q4 Earnings Overview:

IBM’s Q4 earnings were driven by strong performance in software, with revenues of $7.3 billion, up 2.8%. The company’s hybrid platform & solutions led the growth in software, underpinned by a 10% revenue growth in Red Hat. For fiscal 2023, IBM guided revenue growth at constant currency to be in the mid-single digits, with full-year free cash flow expected to be about $10.5 billion, up $1 billion from the prior year.

Analyst Reaction on IBM’s Q4 Earnings :

Wall Street analysts provided a mixed reaction to IBM’s latest earnings release. Stifel analysts cut their price target on IBM to $150 from $158, stating that the company’s stable revenue trend was overshadowed by its “sluggish FCF guide.” BMO Capital’s analysts lifted the firm’s price target on IBM to $155, as they believe the company delivered a “reasonable” quarter with solid revenue growth and FY23 growth guidance, particularly in consulting. However, they noted that the company reported lackluster margins/FCF and guided margins/FCF. Citi analysts said signings and revenue growth guidance for IBM were encouraging, but the firm’s margin expansion and FCF guidance disappointed.

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IBM’s Q4 Earnings and Layoffs:

IBM announced that it would cut 1.5% of its workforce, or about 3,900 jobs, resulting in a $300 million cost. This move comes in the wake of economic growth slowing and follows in the footsteps of recent tech peers who have also announced layoffs.

"IBM Q4 Earnings: A Poetic Perspective"

In IBM's Q4, the numbers are clear,
A beat on earnings, bringing cheer,
Software led the way to rise,
With Red Hat reaching new heights.

But mixed reactions from the street,
Some see potential, others defeat,
Margins and cash flow did not impress,
Leaving some investors in distress.

The future is uncertain, that's true,
But IBM's focus is on the new,
Cloud and AI, the path to go,
To stay ahead in the tech flow.

So let's see what the future holds,
For IBM and its stories untold,
With innovation and strategy,
The company's future looks bright and free.

Conclusion on IBM’s Q4 Earnings :

Overall, IBM’s Q4 performance was strong, with the company beating earnings expectations and delivering solid revenue growth. However, the company’s guidance for margins and free cash flow disappointed analysts. Additionally, the announcement of layoffs raises concerns about the economic climate and the future of the tech industry. It will be important to keep an eye on IBM’s performance in the coming quarters to see if the company can maintain its solid revenue growth and address the concerns raised by analysts.

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