American multinational tech company, IBM, registered a 4.5 percent decline in market value even after the conglomerate bounced back in 2017.
IBM recovered its footing after 23 consecutive quarters of lackluster profits. The company reported its fourth-quarter sales to have increased to $22.5 billion, a 4 percent increase from the $21.8 billion gained during the same quarter in 2016.
According to IBM, the company took a one-time charge of $5.5 billion due to the recent tax reform signed into law by President Trump last year. This charge included tax on accumulated overseas profits as well as a revaluation of deferred tax assets and liabilities, the company added. Once taken into account, the tax rate for the quarter was reported to be 124 percent, with 49 percent being the standard rate for all of 2017.
On Thursday, IBM said that 2017 saw its shares at $13.80, a penny short of analyst predictions, according to Canadian information firm, Thomson Reuters.
The company’s cloud revenue was estimated to be at $17 billion in 2017, 24 percent more than the previous year, out of which $9.3 billion was spent on servicing customers. More so, 2017 saw an 11 percent increase in capital expenditures from the year before, totaling at $3.31 billion.
IBM implied in October that their sales decline would come to an end, which helped raise the company’s stock over the past several months.
Revenue for IBM’s Technology Services and Cloud Platforms fell 1 percent reporting $9.2 billion in the fourth quarter. The company’s Cognitive Solutions business expanded 3 percent at $5.4 billion in profits with the Global Business Services branch edging a 1 percent gain at $4.2 billion in revenue.
James Kavanaugh, IBM’s newly appointed CFO, said that the company will grow its capital expenditures in 2018.
Due to the latest Republican tax bill, the company will have an annual tax rate of 16 percent, with a 1-2 margin of error.
“For us, it’s a long-term benefit, because we now have freedom of capital movement,” said Martin Schroeter, vice president of IBM Global Markets, when discussing the tax reform.
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