But poor Q4 caused by falling hardware revenue takes gloss off results
IBM’s full year results of 2011 saw the company break the $100bn revenue barrier for the second time in its history, but a disappointing fourth quarter slightly took the gloss off the results.
For FY2011 IBM recorded revenue of $106.9bn, up 7% from the $99.9bn recorded in 2010. It represents IBM biggest ever yearly revenue, eclipsing the $103.6bn recorded in 2008. Net income was also up 7%, rising from $14.8bn in 2010 to $15.9bn in 2011.
However, both figures were in fact down on analyst estimations for the year. According to Yahoo Finance, analysts were predicting revenue of $107.1bn and profit of $13.3bn.
"2011 was another very good year for us, with solid revenue performance, continued margin expansion, strong profit and cash generation, and effective use of cash," said Mark Loughridge, IBM’s SVP and CFO, Finance and Enterprise Transformation in a call with analysts and journalists.
"Our focus on key growth initiatives and investments in innovation are enabling us to expand into new markets, and capitalise on trends like analytics and cloud," he added.
Turning to the fourth quarter performance, IBM registered revenue of $29.5bn, up just 1.6% on the year ago quarter. Net income came in at $5.5bn, up 4.4% from the same quarter last year.
What may be a worry for IBM is the collapse in revenue from its Systems and Technology division for the quarter, which fell nearly 8% from $6.27bn to $5.80bn. The division includes its hardware business and revenue from its System z mainframe server products decreased 31% from the same quarter in 2010. That’s not too surprising however, as that quarter saw the largest mainframe sales in IBM’s history following a new product launch, the zEnterprise 196.
System x revenue dipped by 2% and storage hardware revenue fell 1%. However when combined with the storage software growth of 30%, the storage unit grew 5% overall, Big Blue said.
The announcement represents the first financial release since Ginni Rometty took the reigns as CEO, replacing Sam Palmisano.
Rometty was please with the performance. "We had a strong fourth-quarter performance, capping a year of record earnings per share, revenue, profit and free cash flow," she said. "We delivered outstanding results in all four of our strategic initiatives for the quarter and the year, as we continued to realise 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."