The cloud and other forward-looking initiatives continue to pay off for IBM, as the company reported yesterday that its strategic imperatives represented 44 percent of fourth-quarter revenues.

Continued growth in that part of the business is an optimistic sign for IBM. Strategic imperatives, as the company phrases it, could account for 50 percent of the company's revenues "sometime in 2018, depending on M&A cadence," wrote BMO Capital Markets analyst Keith Bachman in a report issued today.

In other words, newer technologies such as Watson, IBM Blockchain, and IBM Cloud could soon add up to more sales than "core" IBM.

The 50 percent mark isn't all good news. Strategic imperatives are becoming a bigger percentage of the company because "core" IBM businesses continue to shrink, down 9 percent in revenues, year-over-year, for the fourth quarter. Strategic imperatives, on the other hand, grew 12 percent year-over-year.

For the fourth quarter, IBM's revenues were $21.8 billion, down from $22.1 billion in the same quarter a year ago. Net income was $4.5 billion, or $4.74 per share, compared with $4.46 billion, or $4.60 per share, a year earlier.

Non-GAAP earnings per share of $5.01 beat the analyst consensus of $4.88 as reported by Thomson Financial.

Cloud revenues were up 35 percent in the fourth quarter, to $13.7 billion.

Cognitive Solutions, which includes Watson, as well as other products and services, grew 7 percent year-over-year to $3.5 billion in the fourth quarter.

IBM doesn't specify revenues for Watson itself. But it's talked recently about some of the money being spent on Watson — namely, a $200 million outlay for a Watson-related Internet of Things (IoT) center in Munich, announced in October.