By Maria Armental 
 

International Business Machines Corp.'s stock traded down Friday, a day after reporting December quarter financial results, including revenue that missed Wall Street expectations.

Shares were recently trading at $118.98, down 10% for the day and about 17% over the past 12 months.

The tech icon--which is in the process of separating its managed infrastructure services business in what would be its biggest business exit--had already warned that the quarter's revenue results would reflect customers' spending adjustments during the pandemic as well as product cycles and year-earlier comparisons.

On Thursday, company officials said fourth-quarter revenue fell 6.5% to $20.37 billion, short of "typical seasonality" and analysts' projections.

During IBM's conference call to discuss the financial results, Bernstein analyst Toni Sacconaghi zeroed in on the revenue miss.

"At least in my eyes, it looks significantly worse," Mr. Sacconaghi said, adding that setting aside the challenges that company officials had already flagged like year-ago comps, "the elephant in the room is, how do you know that there isn't something more sinister afoot here?"

IBM officials assured investors that they expect the company to return to revenue growth in 2021 at current spot rates, with stronger performance in the second half of the year.

Chief Executive Arvind Krishna, who has called revenue growth "the most important metric," said that IBM was making progress in its turnaround and that that progress would be reflected in the company's results in 2021. But "we know it's not necessarily going to be a straight line," he said, noting that the operating environment remains difficult as the most recent results showed.

Mr. Krishna said IBM, which had a reputation for being too slow to respond, is changing its culture to one of "growth and entrepreneurial mindset," a critical part of his transformational plan.

On Thursday, he again referred to that, saying that IBM was "encouraging more business risk-taking and ensuring a higher tolerance for failure across the business. This should allow us to more quickly respond to clients, seize more opportunities, and drive better business outcomes."

 

Write to Maria Armental at maria.armental@wsj.com

 

(END) Dow Jones Newswires

January 22, 2021 13:05 ET (18:05 GMT)

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