IBM Will Add More Color To Painful Transition With Q1 Earnings

By | April 16, 2016

Scalper1 News

IBM ( IBM ) will take a new approach when it reports first-quarter earnings after the market close Monday, in order to give investors a better view of its transformation. Big Blue, at its Investor Briefing in February, said it would revise its financial reporting to reflect the transformation of the business and provide investors with better visibility into its operating model. This includes disclosing additional information on its strategic imperatives by segment. The consensus estimate is for IBM to report revenue of $18.26 billion, down 6.6% year over year. That would mark its 16th straight quarter of a year-over-year sales decline. Analysts polled by Thomson Reuters also expect earnings per share minus items to fall 28%, to $2.09, the fourth quarter in a row of year-over-year declines. IBM reported better-than-expected Q4 earnings on Jan. 19, saying it was making “significant progress” in a major company transition. But the stock fell 5% the following day as the company’s guidance for 2016 fell short of estimates. IBM stock fell to a six-year low of 118 that day, but it’s up nearly 30% since then, above 150, helped by a better foreign-exchange rate and on expectations of a revenue boost from its “Watson” super-computer business, among other things. IBM has long been in transition, shedding hardware units and realigning its workforce to reduce costs as it focuses on growth areas such as cloud computing, Big Data analytics, security, and mobile computing — areas that it refers to as strategic imperatives. IBM has placed a big bet on Watson, known for its heady play on the “Jeopardy” game show but now key to IBM’s Cognitive Solutions business. In a research report on April 13, UBS analyst Steven Milunovich maintained a neutral rating and price target of 132 on IBM stock. Credit Suisse analyst Kulbinder Garcha, meanwhile, has an underperform rating on IBM and price target of just 110. He does not expect IBM revenue to stabilize until 2018. “We see a painful multiyear turnaround from here, which drives underperformance,” wrote Garcha, who has been among the most negative on IBM. Scalper1 News

Scalper1 News