Tag Archives: hpe

ServiceNow Stock Jump Puts Software Slump Mostly In The Dump

Realizing that more big customers than ever are paying bigger dollars for ServiceNow ( NOW ) software in the cloud, investors bought up ServiceNow stock Thursday, healing much of the pain that they endured through the infamous Software Slump of January and February. ServiceNow stock shot up 18% in morning trade on the stock market today before easing back to a 15% gain, near 74.50, Thursday afternoon. It’s 18% off a record high at 91.28 set Dec. 4, but it’s more than 60% up from the nearly two-year low of 46 reached Feb. 8. ServiceNow late Wednesday issued first-quarter earnings and sales that exceeded Wall Street estimates. Shares of rival  SAP ( SAP ) were down a fraction Thursday afternoon, but  Salesforce.com ( CRM ) stock was up 1%. “We now have 249 customers each paying us more than $1 million in annualized contract value, an increase of 48% year over year,” ServiceNow CFO Michael Scarpelli said in the company’s earnings release. “We also landed a record 13 upsells in the (first) quarter, each with an annualized contract value greater than $1 million.” Those results helped drive Q1 revenue up 44% to $350.9 million vs. the $301 million expected by analysts polled by Thomson Reuters. Non-GAAP (generally accepted accounting principles) EPS rose to nine cents from a penny in the year-earlier quarter. Analysts had expected seven cents. Excluded from the adjusted earnings, among other things, were $270 million in legal expenses to settle patent infringement lawsuits that BMC Software and Hewlett Packard Enterprise ( HPE ) brought against ServiceNow. It brought the bottom line to a $333 million net loss vs. $58 million lost a year earlier, or a $2.06 GAAP loss per share vs. a 38-cent loss in 2015’s Q1. Analysts and investors prefer to concentrate on the apples-to-apples non-GAAP comparisons. William Blair analyst Justin Furby reiterated his firm’s outperform rating on ServiceNow without a price target, though he said, “The stock can double (or more)” over the next five years. “All other first-quarter metrics (revenue, non-GAAP operating margin, non-GAAP EPS, deferred revenue, free cash flow) came in ahead of guidance and the Street, and the company’s second-quarter billings outlook of 31%-33% growth (37%-39% subscription billings growth) bracketed the consensus view of 32%,” said Furby in a Thursday research note. Canaccord Genuity analyst Richard Davis maintained a buy rating with a 90 price target on ServiceNow. “We believe full-year guidance is likely conservative and sets the company up to outperform for the remainder of the year,” he said in a Thursday note. FBN Securities analyst Shebly Seyrafi raised his price target on ServiceNow stock to 90 from 80.

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.

Here’s Why IBM Is Falling Despite A Solid Q1 Earnings Beat

IBM ( IBM ) was trading down 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 was down more than 6%, near 143, in afternoon trading 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.