International Business Machines Corp. (IBM) reported earnings after the close on Tuesday, January 21. As predicted by the contributing analysts on Estimize.com, IBM beat the Wall Street consensus on profit, but missed on revenue. This quarter the hardware business took a big hit and it impacted IBM's top line, the stock price declined in after hours trading but it's nothing to fret over for long-term investors.
By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors, Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but increased accuracy is just icing on the cake. The real value of the Estimize data set comes from the fact that it better represents the market's expectations. In this case, IBM beat the market's expectation for profit but missed by a wide margin on revenue.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
After the market closed IBM beat Wall Street and Estimize on profit by announcing $6.13 EPS while Wall Street was expecting $6.01 and Estimize.com forecast $6.03. IBM missed both revenue forecasts by a wide margin by reporting $27.699B revenue while the Street predicted $28.281B and the consensus from Estimize was $28.257B.
IBM is known for moving at its own pace and marching to the beat of its own drum. At the end of the quarter, IBM announced its intention to sell off its low-end server business and invest $1.2 billion in 15 data centers across the globe to buff up its cloud-computing capacities. In addition to the data centers investment, IBM is also committing to opening up its Jeopardy champion super computer Watson to collaborate with private developers. New applications that take advantage of Watson's superior artificial intelligence and computing power could become a big source of profit in 2014.
While revenue this quarter was a big disappointment, year-over-year profit was actually up and IBM has repositioned itself for the near future. Super-star investor Warren Buffett also seems to think that IBM is making the right moves. While the Oracle of Omaha generally avoids tech stocks, his firm, Berkshire Hathaway (BRK.A. BRK.B), has accumulated a 5.5% stake in the company. In November 2011 Buffett said, "I don't know of any large company that really has been as specific on what they intend to do and how they intend to do it as IBM."
Disclosure: No positions