What happened

Shares of International Business Machines (NYSE:IBM) rose as much as 10.2% higher on Wednesday morning before backing down to a milder 7.3% gain as of 1:30 p.m. EST. Big Blue's fourth-quarter earnings report inspired the largest single-day gain its stock has seen in years.

So what

In the fourth quarter, IBM's sales fell 3.1% below the year-ago period's result, landing at $21.8 billion. This metric was in line with the consensus analyst projection. On the bottom line, the technology giant edged out Wall Street's $4.84 target by reporting adjusted earnings of $4.87 per share. More importantly, management's profit and cash flow guidance for fiscal year 2019 exceeded the current analyst view.

IBM's CEO, Ginni Rometty, smiling with arms akimbo in a purple dress.

IBM's CEO, Ginni Rometty, likes what she sees in the company's future. Image source: IBM.

Now what

"In 2018 we repositioned our business model and delivered revenue, operating profit and EPS growth along with strong free cash flow realization," CFO James Kavanaugh said in a prepared statement.

In other words, IBM's long and arduous journey back to healthy growth is turning an important corner right here. The stock is still trading 19% lower over the last 52 weeks and 28% lower in a five-year perspective. Assuming that IBM can follow up this successful report with steady growth throughout 2019 and then close the pending acquisition of open-source software specialist Red Hat (NYSE:RHT), this could be a prosperous year for Big Blue and its investors.

Anders Bylund owns shares of IBM and Red Hat. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.