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IBM profits slashed almost in half in 2020, despite cloud growth

IBM
(Image credit: Image Credit: Ricochet64 / Shutterstock)

Despite relative success in the cloud market, IBM has reported a decline in revenue for both Q4 and its 2020 fiscal year, leading to a significant fall in profits.

On an earnings call, the company reported $20.4 billion in revenue for the fourth quarter of the year, less than the $20.67 billion analysts had anticipated and six percent less than the same period last year. For the full year, the company reported $73.6 billion in revenue, which is 4.6 percent less than in 2019.

Consequently, profits were down 42 percent, from $10.57 GAAP EPS to $6.13, with net income sitting at $5.5bn.

As per a report from The Register, the company was keen to draw attention away from the numbers and towards its 2020 successes. In a statement, CEO Arvind Krishna said:

"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. 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."

The Cloud & Cognitive Software group (which includes Cloud & Data Platforms, Red Hat, Cognitive Applications and Transaction Processing Platforms) recorded revenue of $6.8 billion, down 4.5 percent compared to last year.

However, led by recent acquisition Red Hat, Cloud & Data Platforms grew by nine percent and cloud-specific revenue for the group increased by 39 percent.

The company recorded overall cloud earnings of $25.1 billion in 2020, up 19 percent year-on-year. For the quarter, cloud brought in $7.5 billion in revenue, up 10 percent.