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IBM Posts Disappointing Earnings Year; Intel’s Q4 Beats Predictions

Jan. 22, 2021
Intel recently announced the appointment of a new CEO, Pat Gelsinger, effective February.

International Business Machines Corp. and Intel Corp. both released their fourth-quarter earnings January 21. Both companies reported a loss in revenue for the quarter.

IBM’s took in $20.4 billion over the last quarter of 2020, a loss of 6 points, and adjusted earnings per share of $1.41. The company made $73.6 billion over the course of the whole year—4.6% less than it made in 2019.

The company saw particularly heavy losses in its systems hardware and operating systems segment as revenue from sales of their computer hardware fell 17.8%, a significantly greater loss than any of IBM’s other divisions. On a conference call with analysts, IBM CFO Jim Kavanaugh cited an “amplified” trend in consumers avoiding capital expenditures in the drop.

“The challenging environment we have seen since March continued with the shift in client buying behaviors and priorities,” said Kavanaugh.

IBM’s free cash flow for the full year was $10.8 billion. The computing giant did not release any guidance for the first quarter of 2021, but it expects revenue and cash flow to grow over the course of 2021.

Intel, which just a week ago announced its new CEO, also lost revenue but took heart from performing better than expected in the fourth-quarter of the COVID-plagued year. The company made $20.6 billion in the fourth quarter, $2.6 billion more than it predicted in October. Intel’s quarterly earnings were about 1% worse than they were in Q4 2019. Adjusting earnings per share for Q4 2020 was $1.42.  

Over the course of the whole year, though, Intel took in $77.9 billion in revenue, up 8% compared to 2019’s revenue, $72 billion. CEO Bob Swan, in a statement, said that 2020 was Intel’s fifth record revenue year in a row. According to the company, Intel made $35.4 billion from operations and $21.1 billion in free cash flow.

“I am proud of what we have achieved as a team,” said Swan, who will be stepping down February 15 for Pat Gelsinger, said in a statement. “Intel is in a strong strategic and financial position as we make this leadership transition and take Intel to the next level.” 

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