RESEARCH TRIANGLE PARK – IBM’s quarterly revenues dropped 6% compared to 2019, missing Wall Street estimates, and as a result Big Blue stock tumbled 8% in after-hours trading Thursday.

Investors were not reassured by comments from IBM (NYSE: IBM) CEO and chair Arvind Krishna that he expected revenue growth this year as the tech giant move toward spinning off its Global Technologies group.

A drop in cloud/cognitive (artificial intelligence) revenue came as a surprise. Revenue has now declined four consecutive quarters.

No update on plans for “NewCo” – the operating name for the spinoff – were disclosed in the earnings release but executives did discuss progress toward the spinoff which is expected this year.

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Profits did exceed analysts’ projections at $2.07 a share – 30 cents higher than expected. However, the earnings were well below the $4.71 reported a year ago on revenue of $21.78 billion.

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Revenue last quarter fell to $20.4 billion – below expectations of $20.6 billion.

Shares closed at $131.65, up $1.57 or 1.2% Thursday then fell more than $8, or 6.3%, to $123.52 30 minutes after the close. Just before 5 p.m., shares werre down more than $9 or 7%. Shares continued to fall in the evening, losing $10.20 or nearly 8%.

In a statement Krishna was optimistic.

“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,” he said “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.”

Reported TechCrunch:

“If Krishna was looking for a silver lining, perhaps he could take solace in the fact that Red Hat itself performed well, with revenue up 18% compared to the year-ago period, according to the company. But overall the company’s revenue declined for the fourth straight quarter, leaving the executive in much the same position as his predecessor Ginni Rometty, who led IBM during 22 straight quarters of revenue losses.”

However, for the full year of 2020 IBM said revenues declined 4.6 percent from 2019 to $73.6 billion. Earnings declined to $6.13 per share from $10.57, down 42%.

The company said full-year results reflected “impacts” linked to its $34 billion acquisition of Raleigh-based Red Hat in 2019 and a $2.04 billion pre-tax charge taken in the fourth quarter ahead of the “NewCo” spinoff.

James Kavanaugh, IBM’s senior vice president and chief financial officer, remained optimistic just as Krishna,

“In 2020 we increased investment in our business across R&D and CAPEX, and since October, announced the acquisition of seven companies focused on hybrid cloud and AI,” Kavanaugh said. “With solid cash generation, steadily expanding gross profit margins, disciplined financial management and ample liquidity, we are well positioned for success as the leading hybrid cloud platform company.”

Read the full earnings report online.