IBM reported fourth quarter earnings of $6.21 billion or equivalent to $5.73 per share. Revenue was $27.71 billion, which was 5% less than for the same quarter one year ago. Earnings that were non-GAAP for the quarter ending December 31, 2013 were $6.13 per share.
Wall Street had expected fourth quarter non-GAAP earnings to be $5.99 per share and revenue of $28.26 billion. IBM did not reach its targets on revenue in any of the four quarters during 2013.
On outlook, IBM has projected net income for 2014 to be $17 per share and its non-GAAP earnings to reach $18 per share. Both projections are above the Wall Street estimates of $16.96 for GAAP earnings and $17.97 for non-GAAP earnings.
The biggest challenge facing IBM is growing its units that are up and coming such as analytics, Watson, mobile, cloud and e-commerce fast enough for them to offset its sectors such as hardware that have struggled.
Ginni Rometty, the CEO said the team of executives at Big Blue would forgo their annual incentives since overall performance was not up to expectation.
IBM’s biggest problem in its results from the fourth quarter was in the hardware division. The technology and systems division reported income of more than $206 million, which was down 79% from one year ago. Revenue for that division was $4.3 billion, which was also down 26% from the previous year.
Revenue in Storage, System X, System Z and Power Systems was all hit very hard.
IBM CFO Martin Schroeder said during a conference call on the earnings that IBM had could reach its 2015 plan of delivering $20 per share in operating earnings. However, the hardware business had become a huge drag.
Revenue for technology services fell 4% during the fourth quarter, while sales in business services were up by 1%.