Jan. 21, 2014, 4:24 PM
- IBM has established 2014 EPS guidance of $18, slightly above a $17.97 consensus.
- Revenue continues to be pressured by nosediving hardware/chip sales, which declined 26% Y/Y in Q4 after dropping 17% in Q3 and 12% in Q2. Mainframes -37%, Power servers (UNIX-driven) -31%, x86 servers (reportedly on the block again) -16%, storage -13%, chips -33%. The numbers suggest share loss to H-P, Dell, TSMC, and others.
- Global Technology Services revenue -4%, same as Q3 and Q2. Global Business Services +1%. Services backlog is at $143B, +1% Q/Q and +2% Y/Y. Software +3% vs. +1%, global financing flat vs. +6%.
- $5.8B was spent on buybacks, up from $1.9B in Q3 and providing a big lift to EPS. Gross margin, which has been steadily rising in recent years, rose 30 bps Y/Y to 52.6%.
- Asia-Pac sales, pressured by NSA fallout, were soft again, declining 12% Y/Y; they dropped 15% in Q3. Americas fell 3%, and EMEA was up 1%. Sales to "growth markets" declined 5% after falling 9% in Q3.
- IBM -2.2% AH. CC at 4:30PM ET.
- Q4 results, PR
Jan. 21, 2014, 4:07 PM
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Oct. 17, 2013, 2:08 PM
- UBS' Steve Milunovich, who downgraded IBM (IBM -6.8%) to Hold following its $1.07B Q3 revenue miss: "Results could improve as 2014 unfolds, but the next two quarters likely won’t be too encouraging ... Normally we would wait out mediocre results ... but there are too many questions this time." He observes IBM was only able to maintain full-year EPS guidance because of the $0.40/share Q3 boost provided by a lower tax rate.
- SocGen (Hold) thinks IBM might once more turn to M&A to lift growth. In particular, the firm considers major app software purchases a possibility as database and middleware sales are pressured by the cloud transition. IBM's middleware sales rose 1% Y/Y in Q3, and "information management" sales (inc. databases) rose 2%. OS sales, hurt by server weakness, fell 4%.
- CLSA is staying bullish, praising IBM's efforts to deal with industry pressures by making large analytics/cloud investments. Wells Fargo (Market Perform) expects a new buyback to be announced on Oct. 29, but also thinks "visibility to the 2015 $20 EPS target has become murkier."
- More on IBM's Q3: I, II. CC transcript.
Oct. 16, 2013, 6:13 PM
- IBM's Chinese sales fell 22% Y/Y in Q3 and its hardware sales within the country dove 40%, management disclosed on the CC. The latter accounted for 5% of the 9% revenue drop seen for "growth markets" during Q3. A demand rebound isn't expected until after Q1 2014, as local firms wait for economic reform plans to be announced.
- Talking about growth market weakness in general, IBM admits only half of its challenges stem from business conditions; the rest are execution-related.
- "We see a pattern...," said Bernstein's Toni Sacconaghi in a pointed question. With IBM having seen six straight quarters of revenue declines, Sacconaghi wonders if Big Blue should model for 0% rev. growth going forward. Management gave a list of reasons why a return to growth was possible, including a healthy services backlog (+6% Y/Y in Q3 exc. forex).
- Power systems (UNIX server) sales plunged 38% Y/Y in Q3, worse than Q2's 25%. System x (x86 servers) fell 18%, storage hardware 11%. System z (mainframes) rose 6%, aided by an upgrade cycle. Chips +1%.
- One bright spot: cloud-related revenue topped $1B, with $460M coming from cloud services (a chunk of which likely comes from SoftLayer).
- Q3 free cash flow (exc. financing receivables) was $2.2B, down $900M Y/Y and well below net income of $4.4B. IBM ended the quarter with $12.3B in cash/investments and $10.3B in non-global financing debt.
- IBM now -5.9% AH. Q3 results, guidance/details.
Oct. 16, 2013, 4:20 PM
- IBM is still guiding for 2013 EPS of at least $16.90 (consensus is at $16.89). Job cuts, $1.9B in buybacks (down from $3.6B in Q2), a lower tax rate (16% vs. 22% in Q2 and 24.6% a year earlier), and a 60 bps Y/Y increase in gross margin to 48% allowed Q3 EPS to beat estimates in spite of a $1B revenue miss.
- Asia-Pac revenue -15% Y/Y, Americas -1%, EMEA +1%. Sales to BRIC countries fell 15% Y/Y., and sales to growth markets in general fell 9%.The numbers come shortly after Teradata warned of weak Asian sales.
- Services revenue -4% Y/Y, same as Q2. Hardware is still ugly, -17% vs. -12%. Software +1% vs. +4%. Services backlog was $141B at quarter's end, flat Q/Q and +2% Y/Y.
- IBM -5.2% AH. CC at 4:30PM ET.
- Q3 results, PR
Oct. 16, 2013, 4:06 PM
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Sep. 27, 2013, 1:07 PM
- The soft revenue and bookings guidance provided with Accenture's (ACN -3.8%) FQ4 results are oveshadowing the company's dividend hike and $5B buyback expansion. Consulting/outsourcing rival IBM (IBM -1.7%) is trading lower in sympathy. Wipro (WIT -3.2%) is also selling off, but outsourcing peers Infosys (INFY -0.3%) and Cognizant (CTSH -0.6%) have pared their morning losses.
- Accenture's CC remarks (transcript) likely aren't helping. CFO David Rowland mentioned that while outsourcing bookings were healthy (book-to-bill of 1.4), all 3 consulting bookings segments - management consulting, tech consulting, and systems integration - were at the low end of its B2B guidance ranges. Total consulting B2B was 1.0
- Rowland adds Accenture thinks the "cycle of lower growth" it has seen in recent quarters "won't change much" near-term.
- Echoing comments from Cisco's John Chambers, CEO Pierre Nanterme mentioned Accenture is seeing more emerging markets "volatility," even as the U.S. performs well and Europe stabilizes.
- Janney's Joseph Foresi is staying bullish, arguing Accenture is "well positioned given its high end capabilities to gain market share as outsourcing becomes more commoditized."
Jul. 18, 2013, 12:45 PMIBM's (IBM +2.1%) Q2 EPS would've been roughly in-line with consensus if not for a favorable tax rate, Goldman and BMO point out. BMO, which in April estimated a lower tax rate boosted Q1 EPS by $0.29, sees Big Blue's freshly-lowered rate lifting 2013 EPS by $0.32. Management noted on the CC buybacks have lowered share count by 4% over the last 12 months. Much like Oracle and SAP, China weakness pressured Asia-Pac sales (-8% Y/Y); Japan is healthier, though a weak yen is taking a toll. Though Power system sales fell 25% Y/Y, IBM insists it's gaining UNIX server share. IBM expects Global Technology Services (-5% Y/Y) to return to growth in Q3 as it puts the restructuring of low-margin contracts behind it. | Jul. 18, 2013, 12:45 PM | 2 Comments
Jul. 17, 2013, 5:01 PMMore on IBM: Huge buybacks ($3.6B) again boosted EPS. Also helping: a 140 bps Y/Y increase in gross margin to 49.7%. Hardware remained weak, -12% Y/Y (-17% in Q1). System x -11%, System z +10%, aided by refresh. Power systems -25%, storage -7%, chips +6%. Services -4% (-4% in Q1), IBM says it's focusing on high-margin projects. Backlog was $141B, flat Q/Q and +3% Y/Y. Software a bright spot, +4% (flat in Q1). Storage software grew 10%+, Tivoli +13%, WebSphere +10%, "social software" +22%. Financing revenue -6%. Americas -3%, EMEA flat, Asia-Pac -8%. "Cloud" sales +70% in 1H, analytics +11% in Q2. Free cash flow of $2.7B, $17B in last 12 months. Forex pressured results. Company no longer counting on "large divestiture" (likely System x unit) in 2H. IBM +1.2% AH. (PR) | Jul. 17, 2013, 5:01 PM | 2 Comments
Jul. 17, 2013, 4:13 PMIBM (IBM): Q2 EPS of $3.91 beats by $0.14. Revenue of $24.92B (-4.2% Y/Y) misses by $450M. $1B restructuring charge recorded. Expects 2013 EPS (exc. restructuring charge) of at least $16.90, above consensus of $16.64 and prior guidance of $16.70. Shares +3.6% AH. CC at 4:30PM ET (webcast). (PR) | Jul. 17, 2013, 4:13 PM | 10 Comments
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