IBM’s Q4 2011 Earning Beats Market Expectations: Surged By 4.4 Percent


In October 2011, IBM’s market valuation had reached to $214 billion compared to Microsoft $213.2 billion. However, both IBM and Microsoft were far behind Apple’s market value $362.1 billion in the same period. The world’s largest computer-services provider–IBM–has planned to build Asia’s largest cloud-computing center by 2016. Now, the last Thursday earning report of the company has trounced all the speculations. The Wall Street Journal has reported on Thursday that the company has incredibly recorded 4.4% increment in Q4 earning which is greater than expected earnings by analysts.

IBM’s chief Financial Officer—Mark Loughridge—said, “IBM is confident in our ability to leverage our business model” to grow profit, revenue and margins. For 2012, IBM projected operating earnings of at least $14.85 a share, above the $14.82 expected by analysts polled recently by Thomson Reuters. That’s why, in our fourth quarter, we saw pretty good performance in our business, especially in our key investment categories and our software business.”

After-hours trading on Thursday last week, the share of the company mounted up by 2.7% and reached to $185.40 which is just near to all time highest $194.90 in December 2011. IBM has reported that the total profit of the company in Q4 is $5.49 billion ($4.62 a share) which is higher than the company’s profit $5.26 billion ($4.18 a share) in the same period a year ago. The operating earnings—excluding retirement-plan cost and amortization—of the company increased to $4.71 a share from $4.25 a share. In addition to this, gross margin also rose to 49.9% from 49%.

The company has recorded its market growth in various countries including Brazil, Russia, India, and China. Meanwhile, the company has also improved its revenue in America by 3%, the total sales in Europe, the Middle East and Africa has risen by 1%.

Whereas, IBM’s system-and-technology units reported a decline of 8% in its revenue in the same period. This unit of the company comprises System Z mainframe server for large enterprises,  has been responsible for the growth of revenue in the recent quarters. However, the decline in revenue in this unit is estimated due to tougher year-to-year comparisons.

Due to the growth of the company’s main key products, the revenue from the software segment has been grown up to 9%. In addition to this, the revenue from technology services and business services both also has been grown by 3%. Basically, it seems that IBM’s investment in growing technology sectors, business analytic and cloud computing has benefited the company most in revenue augmentation.

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