International Business Machines (NYSE:IBM) CEO Ginni Rometty did not show up to the conference call, per usual. IBM has missed earnings estimates every quarter for five years running. Its accounting measures continue to be confusing at best. With that being said, senior equity analyst Ben Nye focuses on the balance sheet. He highlights increasing book value as a proponent to view the stock positively, but is still not entirely convinced. Matt Krebsbach chimes in to say that investors should be very skeptical of management because it has taken back guidance numbers in the past.
Wall Street analysts have been bearish on this stock for quite a while. Price targets are usually about 20% higher on blue chip stocks than current market prices, which is not the case here. The five percent decline after this earnings release is justified and perhaps not fully reflective of the future. Recent acquisitions have not been a big enough factor to turn the company's deflating brand around. Changing to a more simplified accounting would be a large catalyst for the company, even if it suffers in the short term.
Disclosure: I am/we are long IBM.
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