NEW YORK – IBM delivered a positive outlook for revenue and cash flow in 2024, an optimistic signal for the pace of corporate technology spending, even as it expects to reduce jobs.
Free cash flow will be about US$12 billion (S$16 billion) in the year ending in December, the company said on Jan 24 in a statement.
Analysts, on average, estimated US$10.9 billion, according to data compiled by Bloomberg.
Revenue will grow in the “mid-single digits”, the company said.
Analysts projected about 3 per cent sales growth.
IBM has focused on streamlining its operations around software and services in recent years.
It has introduced new products to capitalise on growing interest in artificial intelligence.
“Client demand for AI is accelerating and our book of business for watsonx and generative AI roughly doubled from the third to the fourth quarter,” chief executive Arvind Krishna said in the statement, referring to the company’s AI platform.
IBM also said it will also cut a percentage of positions in the low single digits in 2024.
The planned job cuts follow similar announcements in January by major tech companies, including Alphabet’s Google and Amazon.com.
Chief financial officer James Kavanaugh said IBM will likely spend the same amount on restructuring as it did in 2023 – US$400 million – when it reduced its workforce by about 3,900 jobs.
However, the company continues to hire for certain positions and expects headcount to be about the same at the year’s end, he said. IBM had about 288,000 employees at the end of 2023.
During a conference call after the results were released, Mr Krishna said that he expects “many macro trends to be similar to 2023” in the coming year.
“Every client I speak with is asking about how to boost productivity with AI and manage the technology stack,” he said.
IBM shares rose about 8 per cent in extended trading after closing at US$173.93 on Jan 24.
The stock has gained 23 per cent in the past 12 months.
The cash flow outlooks “suggests greater operational efficiencies and steady organic growth”, wrote Bloomberg Intelligence senior analyst Anurag Rana. “We expect IT spending to accelerate more towards the second half of the year, which could lead to steady improvement in consulting growth.” BLOOMBERG
