IBM - Any comments BC?
CBS MarketWatch sang:
IBM shares rose over 2 percent in early trading Friday after the technology giant overnight turned in strong second-quarter results that beat analysts' earnings estimates and backed its outlook for the rest of the year.
CBS also reported analyst ratings of buy and having a "compelling" valuation.
cbs.marketwatch.com
-----------------------------------------------------------
But the NYTimes story is quite different. Same kind of heading: I.B.M. Profit, Up by 17%, Bucks Trend in Industry.
The broad message from I.B.M. was that the slow, steady recovery in technology spending - which accounts for about half of all business investment - still seems on course. I.B.M. executives said that the tepid sales in June might have been a bit puzzling, as is the recent uncertainty about the economy in general. But they strongly suggested that the slippage seemed to be temporary.
-------------
I.B.M. is far from a perfect stand-in for the technology industry as a whole. More of its revenues, from services and mainframe software, come from a fairly steady subscriptionlike business than at most other computer hardware or software companies, which do not have the ballast of so much recurring revenue. I.B.M. is also more international than many companies, so it is less susceptible to economic swings in the United States.
------------
The company reported profit of nearly $1.99 billion, up 17 percent from $1.71 billion in the year-earlier quarter. It reported earnings per share of $1.16, or 4 cents higher than the consensus estimate of Wall Street analysts. I.B.M. earned 98 cents a share in the second quarter of 2003.
------------------------------------------------------------------------------------------------------------------------------------------------
But wait:
Revenue in the quarter rose 7 percent, to $23.2 billion, compared with $21.6 billion a year earlier. The revenue figure for the quarter was about $150 million less than projections of Wall Street analysts. After adjusting for currency gains, I.B.M.'s revenues rose only 4 percent.
Hardware sales were particularly strong, rising 12 percent, to $7.4 billion, helped by a 44 percent gain in mainframe revenue. Software sales were flat, down 4 percent adjusting for currency, at $3.5 billion. "We had some of the same challenges highlighted by our pure-play competitors in the last two weeks," Mr. Loughridge said.
Revenue from I.B.M.'s big services business rose 7 percent, to $11.3 billion, though only 2 percent after adjusting for currency gains.
-------------------------------------------------------------------
-------------------------------------------------------------------
Revenue increases were, to a large extent, the result of currency gains. Presumable currency gains aided profits as well. But something neither story addresses is how come profits were up 17% and revenues up only 7%? And if the bulk of the revenues were up on currency gains, how does bode for a future of likely currency losses? |
