I don't know about you but I have watched many companies pre announceing still give even far worse results than expected.
Read this, because you missed the growth in software, mid range servers, disc drives, semiconductors, etc. What were you reading?
Investor News
IBM's First Quarter Comes Out
Ahead Of Estimates
(04/20/98; 5:25 p.m. ET)
By Gabrielle Jonas, TechInvestor
IBM reported Monday first quarter earnings of $1.04
billion, or $1.06 a share, down from a year ago, but
ahead of Wall Street estimates.
Wall Street was looking for earnings of $1.05 a share.
IBM's [IBM] shares moved higher in aftermarket
trading.
The company's first quarter results compare with
earnings of $1.19 billion, or $1.16 a share, in the same
quarter a year ago. Revenue was up slightly to $17.6
billion, compared with $17.3 billion a year ago.
Wall Street had expected a tough first quarter following
IBM's fourth quarter earnings announcement.
IBM in January said marketing and acquisition costs, as
well as price pressures, would hurt first quarter results.
That prediction in January left few surprises in the first
quarter. The company said hardware sales were hurt by
Asia's financial problems. Increased marketing
expenses related to the Olympics also cut into the
bottom line.
"The balance sheet remains very healthy," said
Lawrence R. Ricciardi, chief financial officer, in a
conference call. "Our competitive position continues to
improve. Asia-pacific is still very tough though at this
point it does not appear to be eroding further."
While IBM's earnings were hurt by the price war, Asia,
and increased expenses, Big Blue's no-PC businesses
were a bright spot. Services, software, midrange
servers, and original equipment manufacturers (OEMs)
all had a strong quarter, the company said. Service
sales were up 22 percent, but officials said that trend
will not continue.
Revenue from North America totaled $8.3 billion, up 4
percent compared with the first quarter a year ago.
Revenue from Europe, the Middle East, and Africa
increased 2 percent to $5.4 billion. Asia-Pacific
revenue was $3.2 billion, down 6 percent. Sales from
Latin America totaled $741 million, up 6 percent. The
company (company profile) said currency fluctuations
shaved about 12 cents a share from earnings.
Total hardware sales added up to $7.1 billion in the first
quarter, down from the first quarter of last year. IBM
blamed weakness in PCs.
AS/400 revenue increased, and RS/6000 revenues
were flat. System/390 revenue declined as a result of
year-over-year price reductions and ongoing product
transitions, IBM said, while shipments of System/390
computing power grew about 45 percent. Storage
product revenue increased, with continued strength in
OEM sales of hard disk drives. Semiconductor revenue
grew significantly despite the declines in memory chip
prices in the quarter.
Software sales were up 2 percent to $3 billion, and
IBM shipped 2.7 million Lotus Notes seats.
IBM's overall gross profit margin was 36.6 percent in
the first quarter compared with 38.1 percent a year
ago. In the first quarter, gross margin improvement in
services and software was offset by declines in
hardware and rentals as well as financing margins.
Although IBM had bright spots in the quarter, Ricciardi
was elusive when it came to giving an outlook for the
second quarter.
"The story for the first quarter is really the portfolio
story and the strength of our non PC business which
enabled us to absorb the terrible PC environment," said
Ricciardi. "We will continue to see that environment
extending into the second quarter. We're certainly going
to see pricing pressures through the second quarter as
everyone addresses channel inventory so second
quarter pricing pressures certainly that will be with us."
"My crystal ball doesn't take me beyond that," he said.
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