IBM also took a one time charge of $5.5 billion due to the new tax reform that slashed corporate tax rates from 35 percent to 21 percent.
IBM's quarterly profit, excluding a charge related to the recent US tax overhaul, just edged past analysts' estimates and the company did not detail the expected impact of the new tax rates on current year's results.
IBM reported its first quarter of revenue growth in more than five years as the company ramps up its cloud computing business and looks for new opportunities from its investments in artificial intelligence.
IBM cloud revenue for 2017 was $17 billion, up 24% in year over year, with more than $9.3 billion of the total being a service. IBM returned $1.4 billion in dividends and $0.7 billion of gross share repurchases to shareholders.
The company generated full-year free cash flow of $13 billion, excluding Global Financing receivables.
While IBM, based in Armonk, N.Y., broke a streak that had long caused anxiety among its shareholders, trading of its stock didn't reflect that development.
Ahead of this evening's fourth quarter print set to be released after the bell tolls, the analyst reiterates an Attractive rating on IBM stock with a price target of $180, which implies a 6% upside from current levels.
IBM's overall revenue for 2017 was $79 billion. Securities revenue grew 132%.
"The strategic imperatives segment remains the main fuel in IBM's diesel engine heading into 2018 as it represents roughly 50% of revenue and is growing with double digits", Ives wrote, "thus helping neutralize some of the massive headwinds on its traditional mainframe hardware business".
In the fourth quarter, IBM acquired consulting agency Vivant Digital, settled a patent lawsuit with Priceline and said Daimler AG, JPMorgan Chase and Samsung are collaborating with the company on quantum computing technology. The company will report its fourth-quarter results after the market closes on Thursday, and the launch of its latest mainframe system is expected to make all the difference.
Martin Schroeter, the previous CFO who has since been named senior vice president of IBM Global Markets, said on the earnings call that IBM delivered on a pledge made back in July to improve its trajectory in the second half of the year. The charge encompasses several elements, including a tax on accumulated overseas profits and the revaluation of deferred tax assets and liabilities.
Systems (includes systems hardware and operating systems software) - revenues of $3.3 billion, up 32 percent (up 28 percent adjusting for currency) driven by growth in IBM Z, Power Systems and storage.
IBM said it took a one-time charge of $5.5 billion as a result of the recent passage of USA tax reform.
IBM forecast a 2018 operating tax rate of 16 percent, plus or minus 2 percentage points, compared with a rate of 12 percent in 2017.
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