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IBM earnings beat estimates, revenue comes in light

CNBC with Reuters
Tuesday, 21 Jan 2014 | 4:06 PM ET
IBM's focus not in right areas: Pro
Tuesday, 21 Jan 2014 | 5:32 PM ET
ISI Group's Brian Marshall breaks down his sell rating on Big Blue and says it needs to back away from the long-term earnings target of $20 by 2015.

IBM reported quarterly earnings that beat analysts' expectations on Tuesday, but revenue came in below street expectations.

After the earnings announcement, the company's shares fell 2.4 percent. (Click here for the latest after-hours quote.)

The company posted fourth-quarter earnings excluding items of $6.13 per share, up from $5.39 a share in the year-earlier period.

Analysts had expected IBM to report earnings excluding items of $5.99 a share on $28.25 billion in revenue, according to a consensus estimate from Thomson Reuters.

Revenue decreased to $27.70 billion from $29.30 billion a year ago.

This is the fourth straight quarter that the company's revenue has fallen short of analysts' targets.

"In view of the company's overall full-year results, my senior team and I have recommended that we forgo our personal annual incentive payments for 2013,'' Chief Executive Ginni Rometty said in a statement.

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Sales from its system and technology unit, which includes servers and storage, fell 26.1 percent to $4.26 billion. Revenue from global technology services, its largest business, fell 3.6 percent to $9.92 billion.

Software revenue was the only bright spot, growing 2.8 percent to $8.14 billion.

IBM has been moving steadily into higher-margin businesses such as software and cloud computing as it is struggling to sustain growth through its emerging markets business.

Looking froward, IBM forecast current-year adjusted earnings of at least $18.00 per share vs. $17.97 expected by Wall Street analysts.

Net income for the fourth quarter rose to $6.2 billion, or $5.73 a share, from $5.8 billion, or $5.13 per share a year earlier.

—By CNBC.com with Reuters

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