IBM and Intel release FY earnings

IBM and Intel release FY earnings

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IBM and Intel have published their fourth quarter and FY 2020 earnings, which show that although digitalisation is driving growth, hackers still stole the show.

While there were declines across some business operations at both firms, the two also noted record performance in other areas,

At Intel, fourth-quarter revenue reached US$20 billion, exceeding October guidance by $2.6 billion, while full-year revenue set "an all-time Intel record" at $77.9 billion, up 8% on the previous year.

In 2020, Intel generated a record $35.4 billion in cash from operations and $21.1 billion of free cash flow. It returned $19.8 billion to shareholders. Commenting on Q4 earnings, the firm said it delivered an "outstanding" EPS of $1.42, exceeding October guidance by 42 cents.

Forecasting first-quarter 2021 revenue of approximately $18.6 billion, Intel's board approved a cash dividend increase of 5% to $1.39 per share on an annual basis. The board declared a quarterly dividend of $0.3475 per share on the company’s common stock, which will be payable on March 1.

“We significantly exceeded our expectations for the quarter, capping off our fifth consecutive record year,” said Intel CEO Bob Swan.

“Demand for the computing performance Intel delivers remains very strong and our focus on growth opportunities is paying off. It has been an honour to lead this wonderful company, and I am proud of what we have achieved as a team. Intel is in a strong strategic and financial position as we make this leadership transition and take Intel to the next level.”

However, it wasn't all smooth sailing for Intel. It was reported yesterday that the firm was the subject of a hack; specifically, its quarterly earnings statement was the "object of unauthorised access before publication".

"Once we became aware of these reports, we made the decision to issue our earnings announcement a brief time before the originally scheduled release time,” Intel said in a statement.

Cloud growth, acquisitions, no hacks

Over at IBM, things were slightly less dramatic.

There, a decline in software sales dampened results, which confirmed the company had experienced its 10th consecutive quarter with no year on year revenue increase. But there was an encouraging boost for cloud computing, which saw revenues grow by 10% to a record $7.5 billion in the last quarter of the year.

Full year revenue stood at $73.6 billion, down 5% (4% when adjusting for divested businesses and currency), but total cloud revenue for the year jumped 19% to reach $25.1 billion, while Redhat recorded an 18% rise in full year revenue and a 19% increase for the fourth quarter.

Full year net cash from operating activities stood at $18.2 billion, while free cash flow stood at $10.8 billion.

“In 2020 we increased investment in our business across R&D and capex, and since October, announced the acquisition of seven companies focused on hybrid cloud and AI," said SVP and CFO James Kavanaugh, in the firm's market announcement.

"With solid cash generation, steadily expanding gross profit margins, disciplined financial management and ample liquidity, we are well positioned for success as the leading hybrid cloud platform company," he added.

Kavanaugh told Reuters an accelerated move to cloud by businesses, a sales rebound in the global business services unit, and a weaker dollar, make the company confident of returning to revenue growth this year.

On the outlook, IBM expects adjusted free cash flow of $11 billion to $12 billion in 2021. Adjusted free cash flow excludes approximately $3 billion of cash impacts from the "company’s structural actions" initiated in the fourth quarter of 2020 and the transaction costs associated with the separation of the managed infrastructure services business, effective 15 January.

IBM has said economic uncertainty is making customers reluctant to commit to longer-term deals.

“We made progress in 2020 growing our hybrid cloud platform as the foundation for our clients’ digital transformations while dealing with the broader uncertainty of the macro environment," said Arvind Krishna, IBM chairman and chief executive officer.

"The actions we are taking to focus on hybrid cloud and AI will take hold, giving us confidence we can achieve revenue growth in 2021.”


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