IBM Gears Up To Report Q4 Earnings: What's In The Offing?

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International Business Machines Corporation (IBM - Free Report) is slated to report fourth-quarter 2020 results on Jan 21, 2021.

In the third-quarter earnings conference, management had stated that fourth quarter is a seasonally strong quarter.

Robust pipelines across hybrid cloud and data platform, AI solutions, in Cognitive Apps business driven by strength in Cloud Paks and Security, cloud-based transformation services in the Global Business Services (GBS) segment, and App modernization offerings, are expected to get reflected in fourth-quarter revenues.

Also, management has been banking on advancement in Red Hat “actual backlog growth.” Moreover, gains from rapid uptake of IBM z15 are anticipated to have acted as a tailwind.

The Zacks Consensus Estimate for fourth-quarter earnings of $1.77 per share has been steady over the past 30 days. The figure indicates a decline of 62.4% from the prior-year quarter.

For quarterly sales, the consensus mark stands at $20.51 billion that suggests a decline of 5.8% from the year-ago reported figure.

Notably, the company has a trailing four-quarter earnings surprise of 1.71%, on average.

Factors to Note

IBM’s fourth-quarter performance is likely to reflect gains from solid adoption of its hybrid cloud computing capabilities, mobile, analytics, cognitive technologies, and AI related solutions.

Synergies from Red Hat acquisition particularly might have contributed to the cloud segment’s revenues.

International Business Machines Corporation Price and EPS Surprise

International Business Machines Corporation Price and EPS Surprise

International Business Machines Corporation price-eps-surprise | International Business Machines Corporation Quote

Further, the company’s spin-off of its legacy Managed Infrastructure Services business in an attempt to facilitate digital transformation of clients is a testament to IBM’s efforts to accelerate its hybrid cloud growth strategy.

Moreover, IBM, currently carrying a Zacks Rank #3 (Hold), has been striving to enhance efficiency of its blockchain solutions, and quantum computing systems and services. In this respect, growing clientele of IBM Q Network remains a positive.

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