International Business Machines Corp. shares rose in the extended session Tuesday after the technology giant turned in a surprise revenue gain, its first year-over-year sales increase in more than a year.
Revenue rose to $21.78 billion from $21.76 billion in the year-ago quarter, driven by the company’s cognitive solutions and cloud segments. IBM IBM, +0.62% sales had declined year-over-year for five consecutive quarters, which pales in comparison to a yearslong streak of revenue declines that ended in 2018.
The company reported fourth-quarter net income of $3.67 billion, or $4.11 a share, compared with $1.95 billion, or $2.15 a share, in the year-ago period. Adjusted earnings were $4.71 a share. Analysts surveyed by FactSet had forecast earnings of $4.69 a share and a revenue decline to $21.64 billion.
“We ended 2019 on a strong note, returning to overall revenue growth in the quarter, led by accelerated cloud performance,” said Ginni Rometty, IBM chairman, president and chief executive, in a statement.
IBM reported cloud and cognitive software revenue of $7.24 billion, while analysts expected $7.14 billion, and systems revenue was $3.04 billion versus the $2.83 billion Street view. Global technology services revenue came in at $6.95 billion while the Street expected $7 billion. Global business services revenue was $4.24 billion while the Street had forecast $4.27 billion.
“Looking ahead, this positions us for sustained revenue growth in 2020 as we continue to help our clients shift their mission-critical workloads to the hybrid cloud and scale their efforts to become a cognitive enterprise,” Rometty said.
IBM expects adjusted earnings of “at least $13.35” a share in 2020, while analysts forecast $13.28 a share.
IBM shares rose 3.8% after hours, following a 0.6% rise in the regular session to close at $139.17. In comparison , the Dow Jones Industrial Average DJIA, -0.52% closed down 0.5%, the S&P 500 index SPX, -0.27% declined 0.3%, and the tech-heavy Nasdaq Composite Index COMP, -0.19% slipped 0.2%.
Of the 20 analysts who cover IBM, five have buy or overweight ratings, 13 have hold ratings and two have sell or underweight ratings, with an average price target of $148.53.