Earnings Preview: International Business Machines

Apr.17.12 | About: International Business (IBM)

International Business Machines (NYSE:IBM) is expected to report Q1 earnings after the market close on Tuesday, April 17, with a conference call scheduled for 4:30 pm ET.

Guidance

The consensus estimate is $2.65 for EPS and $24.77B for revenue, according to First Call. IBM has posted an average earnings surprise of 1.84% in the trailing four quarters. The whisper number is $2.69, 4c ahead of consensus. IBM is the first major enterprise IT company to report quarterly financials -- thus, its results and commentary will be closely watched for signs of global tech spending trends and service revenue.

Analyst Views

Sterne Agee analyst Shaw Wu expects IBM Corp. to report "decent" Q1 results. Wu expects IBM to report revenue in-line with and earnings better than Wall Street's projections, driven by its software products and market share gains in high-end servers. This may be offset by "mixed trends" in services, which accounts for more than half of IBM's revenue. Wu said investors will likely focus on profitability in this area, given mixed results from technology service providers Accenture (NYSE:ACN) and Infosys Technologies (NYSE:INFY) in recent weeks. IBM often raises its guidance, and its long-term goal is to reach adjusted earnings of at least $20/share by the end of 2015. Guidance from its last earnings report was for FY12 operating EPS at least $14.85, with the EPS growth rate more skewed to the second half of the year. Consensus for Q2: $3.41 on $26.61B in revenue. Consensus FY12/FY13: $14.93/$16.49 on $108.54B/$112.20B, respectively.