IBM Message Board - Msg: 16096221

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Technology Stocks : IBM

IBM 298.93

+3.1%

Feb 6 9:30 AM EST

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To: Arrow Hd. who wrote (7221)	7/18/2001 6:09:31 PM
From: Arrow Hd.	Read Replies (3) of 8220

Just listened to the IBM CC. Very cautious on the third quarter which was discussed here back in February. Focus on revenue analysis in constant currency which aids the IBM discussion when the dollar is as strong as it is but it is not reality and in the Q&A it did not appear that the analysts accept that comparison. Earnings in line with the consensus which dropped a penny in the last few days. Revenue weak on a YOY basis. Margins ok. Cash flow a positive. Enterprise sector (mainframes and high end DASD) very strong. It appears that with the exit of Hitachi and Amdahl and the assault on EMC that pricing has firmed and margins have expanded. PCs and OEMing of HDDs weak. Again, focus was on the hit they took on currency translations. Expecting a 14c hit in 2H. Write-downs of equity positions another negative with a 5c hit in 2H. Currency issues are accelerating. The above two issues can be offset in 2H if Microelectronics improves but if there continues to be inventory excesses at customers with some weak OEM sectors then 2H can be problematic based upon YOY comparisons. Summary: --Revenues in Constant Currency a "what if" kind of analysis that analysts often do not like to play. --Strong dollar still a problem and getting worse. --Some issues with Europe. --Writedowns will continue. --Microelectronics a wild card. --Did not change full year outlook. Still looking for high single digit growth in revenue but in constant currency. No real comments on full year earnings. My opinion is that estimates will quietly come down starting tomorrow for both 3Q, 4Q and full year. --Analysts questioned full year revenue, earnings and margin estimates in various Q&As. Leads me to believe they may get nervous here. --IBM feels 2002 will see continued growth in major sectors and they will continue to be the technology leader taking share from their competitors. I think that will happen. Overall, a decent report but there were some caution signs and pot holes so I think the next few weeks will depend a great deal upon how these analysts and others read the comments and guidance. All IMHO of course. This was a best efforts to report what I heard. CC should be on replay at the home page.

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