IBM Falls on Weak 2016 Outlook Despite Beating Q4 Expectations

Shares of computing giant IBM fell by about 4 percent in after-hours trading after the company reported fourth-quarter results that beat expectations, but announced guidance for the coming year that did not.

Revenue fell 8.5 percent in the quarter to $22 billion, led by an 11 percent decline in software sales, a 7 percent drop in services revenue and a 1 percent decline in sales of mainframe computers, but rose after adjusting for the effects of the strong U.S. dollar on sales. After adjusting for the effect of currency exchange rates, overall sales would have fallen 2 percent, IBM said.

Profits on a per-share basis were $4.84, beating the consensus view of analysts by three cents.

Shares fell by more than $5 to $123 in after-hours trading on the New York Stock Exchange. The shares have fallen by more than 30 percent from their most recent 52-week high.

It was IBM’s outlook that appeared to shake the confidence of shareholders. The company reduced its 2016 profit outlook, saying it expects to earn $13.50 a share versus the $15 analysts had expected.

One place there was growth was in what IBM calls its “strategic imperatives,” which include cloud computing, cognitive computing and data analysis software. Big Blue said that combined revenue from these lines of business amounted to nearly $29 billion in the fiscal year just ended, representing 35 percent of total revenue and growing 26 percent versus 2014 on a currency-adjusted basis.

That growth was led by cloud revenue, which rose to $10.2 billion for the year. Cloud computing delivered “as a service” rose 50 percent to $4.5 billion and is on track to break the $5 billion mark in 2016, the company said. Analytics revenue rose 16 percent on a currency-adjusted basis to $18 billion.

This article originally appeared on Recode.net.