Category Archives: oud

Here’s Why IBM Fell Despite A Solid Q1 Earnings Beat

IBM ( IBM ) closed down 5.6% at 144 Tuesday, following a first-quarter earnings report late Monday that beat estimates but still left room for concern. IBM has been undergoing a major transition, shedding older technologies while making a concerted push into growth areas such as cloud computing, Big Data analytics, security and mobile computing — areas it calls strategic imperatives. The transition helps explain why revenue growth has declined each quarter for the past four years. In its Q1 earnings results, IBM reported revenue of $18.7 billion, down 4.6% from the year-earlier quarter but edging the Wall Street consensus estimate of $18.3 billion. Revenue from strategic imperatives rose 14%. Total cloud revenue rose 34%. Earnings per share ex items of $2.35 easily beat views of $2.09, as polled by Thomson Reuters, but were down 19% and marked the fourth quarter in a row of EPS declines. IBM stock fell in the stock market today  presumably on the view that Q2 expectations are below estimates. IBM does not provide formal quarterly guidance, but its implied EPS guidance of $2.85 for Q2 is below the consensus estimate of 3.01. Despite the Q1 beat, IBM did not increase but instead maintained its full-year earnings outlook. IBD’s Take: How healthy is IBM’s stock and how does it stack up vs. rivals? Find out at IBD Stock Checkup RBC Capital Markets analyst Amit Daryanani maintained a sector perform rating on IBM stock, and a price target of 155. “We believe the competitive challenges are emerging from companies seeking to build a business model similar to IBM’s, notably Hewlett-Packard Enterprise ( HPE ), Cisco ( CSCO ), Oracle ( ORCL ), EMC ( EMC ), and Dell,” he wrote. Of these competitors, he said, Hewlett-Packard is the closest. Another is Cisco. ‘Attempting To Recreate The IBM Model’ “Beyond Hewlett-Packard and Cisco, there are also others attempting to recreate the IBM model,” he wrote. A harsher report on IBM came from Credit Suisse analyst Kulbinder Garcha, who reiterated an underperform rating and a price target of 110 on IBM stock. “We believe the quality of earnings was again low and the manner in which IBM has chosen to manage its business seems unsustainable,” Garcha wrote. “We believe the secular and structural challenges facing IBM remain, and specifically see limited improvement in Services and Software margins.” UBS analyst Steven Milunovich maintained a neutral rating on IBM but raised his price target to 150 from 132. “The quarter was mixed with revenue and EPS beating due to currency improvement, acquisitions, and the Japan tax rebate,” he wrote. “We give IBM credit for changing the narrative,” with an emphasis on becoming a leader in the new category of Cognitive Computing, which includes its Watson computer business, he wrote. Drexel Hamilton raised its revenue forecast, maintained its EPS projection and raised the price target to 166 from 160.

Manhattan Associates Beats Street, Raises Guidance; Stock Jumps

Supply chain software developer Manhattan Associates ( MANH ) beat Wall Street’s first-quarter earnings and revenues estimates, then raised its full-year 2016 guidance after the market close Tuesday. Investors responded by bidding up the stock more than 7% after hours. Manhattan stock rose a fraction Tuesday and just fell short of a three-month high. CEO Eddie Capel said in the company’s earnings release, “(Manhattan’s) investment in multichannel, retail store and distribution management solutions continue to drive growth and extend our market leadership position in a subdued world economy.” Manhattan said that its Q1 non-GAAP earnings rose 23.5% to 42 cents per share on revenue of $149.9 million, up 12%. Analysts polled by Thomson Reuters had expected 39 cents and $145.5 million. For the year, Manhattan raised its adjusted EPS guidance to a range of $1.73 to $1.76, up 14% to 16%, from an earlier 11%-13% range. And it raised its revenue range to $615 million to $620 million, up 10.5% to 11.5% from an earlier 9.5%-10.5% outlook. Analysts had modeled $1.71 EPS minus items , up 12.5%, on revenue up 10% to $612 million.

Intel Will Slash Up To 12,000 Jobs After Q1 Sales Miss On PC Woes

No. 1 chipmaker Intel ( INTC ) lagged Wall Street’s Q1 revenue expectations late Tuesday on PC sales that grew minimally vs. the year-earlier quarter, and announced that up to 12,000 positions would be cut by mid-2017. The 12,000-cut represents 11% of Intel’s global workforce and will require “a combination of voluntary and involuntary departures and a re-evaluation of programs,” according to the press release. Most affected employees will be notified within 60 days. And CFO Stacy Smith will move to a “broader, new role within Intel” leading sales, manufacturing and operations, and reporting directly to CEO Brian Krzanich. Smith will remain in his role pending a formal CFO search, Krzanich said on Intel’s conference call with analysts, after it released results. Intel stock was down more than 2% after hours, having closed down 0.2% during the regular session. Shares are weaker by 8% for the year, having rebounded from a slide in January and mid-February amid reports of weak Taiwanese ODM sales. Krzanich detailed the restructuring in an email to employees, highlighting Intel’s stepping away from PCs to focus on high-growth segments like the data center, Internet of Things and memory which, together, brought in $2.2 billion in revenue growth in 2015. “We are evolving from a PC company to a company that powers billions of smart, connected devices,” Krzanich said on the call. “We do not take these changes lightly. We will be saying goodbye to employees who have played a great role in Intel’s success.” By restructuring, Intel plans to save $750 million in the first year, with an annual run rate savings of $1.4 billion by mid-2017, allowing Intel to “intensify” its investments in its key growth areas. Ultimately, “we expect an even more profitable client computing group (PC),” Krzanich added. PC sales comprised 55% of Intel’s Q1 sales, but have struggled in recent quarters amid stiff tablet and two-in-one competition. Q1 Sales Lag, But EPS Tops For Q1 ended April 2, Intel reported $13.7 billion in sales and 54 cents earnings per share, up 7% and 20%, respectively, vs. the year-earlier quarter. EPS topped analyst expectations by more than a nickel, but sales missed. The consensus of 45 analysts polled by Thomson Reuters modeled $13.83 billion in sales (against Intel’s non-GAAP revenue of $13.8 billion) and 48 cents EPS, in line with Intel’s earlier view for $14 billion in sales, plus or minus $500 million. Nonvolatile memory sales declined 6% vs. the year-earlier quarter, underperforming the struggling PC unit, which managed to climb 2% year over year. Intel’s high-growth units — data center and Internet of Things — grew a respective 9% and 22% year over year. Security sales popped 12% vs. the year-earlier quarter. Krzanich didn’t address recent rumors that Apple ( AAPL ) might tap Intel to supply 30 million-40 million iPhone 7 modems — a development that had sent Intel’s stock jumping. Qualcomm ( QCOM ) typically sources the iPhone modem and would retain the lion’s share of the iPhone 7, analysts say. Analysts largely doubt Intel’s mobile strategy, which hasn’t yet played out. But Krzanich, on the call, defended the mobile unit, which he said “is absolutely continuing to grow for us as a segment, and we’re increasing our profitability.” For the current quarter, Intel guided to $13 billion to $14 billion in sales, which would be up 2% at the midpoint vs. the year-earlier quarter. The company reduced its full-year guidance to mid-single-digit growth. Earlier, Intel saw mid- to high-single-digit growth. Pacific Crest and S&P Global Market Intelligence analysts had expected Intel to cut its full-year guidance on the ebbing PC market, which industry trackers IDC and Gartner recently saw dipping 11.5% and 9.6%, respectively, in Q1 shipments. Days after the forecasts emerged, rumors cropped up that Intel might be prepping to cut thousands of jobs.   Image provided by Shutterstock .