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Non-Tech : EARNINGS REPORTING - surprises, misses & more -- Ignore unavailable to you. Want to Upgrade?

To: 2MAR$ who wrote (340)	10/17/2000 6:51:08 PM
From: 2MAR$	Read Replies (1) \| Respond to of 762

HIGHLIGHTS-IBM details Q3 results, Q4 outlook for analysts NEW YORK, Oct 17 (Reuters) - International Business Machines Corp. (NYSE:IBM - news) on Tuesday said its historically stronger fourth quarter results would beat those of third-quarter, but warned currency issues could hurt. Here are highlights from a transcript of a conference call IBM Chief Financial Officer John Joyce held with financial analysts following the release of the Armonk, N.Y.-based company's third quarter results. The comments were contained in a filing made with the Securities and Exchange Commission.: FOURTH QUARTER OUTLOOK -- ``Although we are in a volatile and demanding business environment -- our revenue growth should be stronger than in the third quarter,'' he said. -- Third quarter reported revenues grew 3 percent to $21.8 billion, or 6 percent if the negative effects of translating foreign currencies into U.S. dollars are excluded. -- The fourth quarter analyst revenue consensus is $26.6 billion -- 10 percent above the fourth quarter of 1999, according to a First Call/Thomson Financial survey of broker estimates. -- ``We are driving to achieve consensus earnings per share in the fourth quarter -- just as we did in the third quarter,'' Joyce said. The consensus First Call earnings estimate for the fourth quarter is $1.48 compared with $1.12 in December 1999. EURO AND YEN IMPACT ON IBM Q3 RESULTS: -- ``In the third quarter, currency hit us for 3 points in revenue growth -- reflecting both weaker European currencies and less help from the (Japanese) Yen than we got earlier in the year,'' the IBM executive said. CHIP SHORTAGES HURT RS/6000, AS/400 and OEM BUSINESSES ``Due to lack of (semiconductor) chips and ceramic substrates used to package those chips into sophisticated modules -- we could not meet demand from our customers for RS/6000s, AS/400s, and OEM technology.'' RS/6000s and AS/400s are IBM's midrange server and workstation computer lines. OEM, which stands for original equipment manufacturer, refers to IBM's business supplying components such as disk drives and chips to other companies. Joyce said IBM has specific plans to increase the supply of components. He noted that last week's plans to boost capital spending in semiconductor facilities by $5 billion will add to capacity in 2001 and 2002. -- Were it not for this chip shortage, IBM would have reported 2 more percentage points of revenue growth in third quarter, Joyce said. MAINFRAMES Orders for new mainframes slowed more than expected ahead of introduction of its seventh generation of its flagship 390 mainframe computer system, which it announced October 3 and which Joyce said IBM was ``on track'' to ship in mid-December. -- ``In the later stages of September, new orders in the pipeline started to slow, and some existing orders were even deferred,'' Joyce said of demand for its mainframe computers. EXECUTION PROBLEMS IN SOFTWARE, ESPECIALLY TIVOLI UNIT -- ``Our software sales teams did not execute and did not close the business in the pipeline at the end of the quarter. Also, growth in our Tivoli Systems Management software was particularly disappointing,'' the IBM CFO said. ASIA-PACIFIC BUSINESS STRONGEST, AMERICA WEAK -- ``With 17 percent growth, Asia Pacific again was the strongest region -- with improving performance in most business areas. But Americas' results were disappointing.'' -- Joyce said IBM's decision to quit selling consumer PCs through U.S. retails hurt revenues in the U.S. region, which was also hurt more than other regions by the lingering effects of the Year 2000 software transition. -- ``These transitional issues hurt IBM's growth overall by a point and a half -- but hurt the America's growth by 3 points,'' Joyce said. STRONG DOLLAR COULD HIT Q4 EVEN HARDER ``If the dollar remained at current levels for the fourth quarter -- the currency situation will only get worse,'' he said, noting the U.S. dollar has continued to strengthen vs. foreign currencies during the first three quarters of 2000. -- In third quarter, earnings per share were hurt by about one cent per share due to currency, especially the falling euro, Europe's unified currency. -- ``The impact in the fourth quarter may well be larger -- not only due to the possible larger year-to-year drop in the euro -- but also due to its rapid rate of decline that did not provide opportunities to hedge at rates that would have totally offset currency loss,'' Joyce cautioned. HIGH SINGLE-DIGIT REVENUE GROWTH REMAINS LONG-TERM GOAL ``We continue to believe that IBM, over the longer-term, can deliver shareholder value through... high single-digit revenue growth, improving cost and expense, and strong cash flow, leading to double-digit earnings per share growth,'' Joyce said.