Less than three weeks after inheriting Sam Palmisano's job as CEO at IBM, Ginni Rometty has had the pleasure of announcing that full year revenue in 2011 broke through into new ground at $106.9 billion.
This was up seven percent from the $99.9 billion of 2010. Gross margins improved slightly, pre-tax profit was up 6.5 percent at $21 billion and net earnings were up seven percent at $15.9 billion. Diluted earnings per share were $13.06 – up 13 percent as share buybacks cut the weighted average number of shares from 1.29 billion to 1.21 billion.
In her statement, Rometty said, "We had a strong fourth-quarter performance, capping a year of record earnings per share, revenue, profit and free cash flow" and she said, "we are well on track toward our long-term roadmap for operating earnings per share of at least $20 in 2015" – a figure based on what IBM calls its operating basis rather than generally accepted accounting principles (GAAP).
The detail of the latest announcement reveals a marked slowdown in the fourth quarter. IBM's main activities in technology and business services, now accounting for 56 percent of revenue, were up 6.6 percent for the year, dragged down by a rise of only 2.7 percent in the fourth quarter.
And the picture in IBM's traditional focus – systems and technology – was even worse.
For the year, segment revenues were $19.0 billion, an increase of six percent (three percent, adjusting for currency). But for the last quarter, revenue was down 7.6 percent to $5.8 billion.
Revenues from System z mainframes was down 31 percent, System x was down two percent, system storage was down one percent and microelectronics was down 11 percent.
There was some consolation in a nine percent increase in revenue from retail store systems.
Overall, the quarter's gross margin was down three points to 40.5 percent and pre-tax profit fell by a third to $790 million. So, not such a strong fourth quarter there.