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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: PCSS who wrote (88844)	1/14/2001 11:05:40 AM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

IBM Seen Posting Higher 4th-Qtr Profit; Analysts Watch Outlook By Paul Horvitz Armonk, New York, Jan. 13 (Bloomberg) -- International Business Machines Corp., the No. 1 computer maker, is expected to report higher fourth-quarter profit and revenue, though analysts said their main focus will be the company's forecast for 2001. IBM on Wednesday will report profit of $1.46 a share on sales of $25.5 billion, according to the average estimates of analysts polled by First Call/Thomson Financial. A year ago, net income was $2.09 billion, or $1.12, on revenue of $24.2 billion. Some analysts recently trimmed sales estimates for the fourth quarter, citing the computer sales slump that has hurt business at Compaq Computer Corp., Intel Corp. and others. A number of forecasters say IBM will be hard-pressed to offer encouragement for the March quarter given the U.S. economic slowdown that's curbing corporate spending and personal-computer demand. ``I don't think IBM is going to be immune'' to these issues, said Deutsche Banc Alex Brown analyst Philip Rueppel. ``They're likely to come in reasonably close to expectations. What's going to be key to their stock is their outlook for the next couple of quarters.'' Rueppel, who has a ``market perform'' rating on Armonk, New York-based IBM, said revenue from mainframe computers may be a pocket of strength for the company, though PC and software sales may show weakness. Global Reach IBM shares rose 13 cents to $93.81 yesterday. They have dropped 30 percent from a 52-week high of $134.94 reached on Sept. 1. The company's global reach plus its breadth of products, from software and semiconductors to server computers and services, can act as a buffer against a slowdown, some analysts said. Still, the weak euro is likely to cut the value of reported revenue by $1.3 billion in the quarter, said Salomon Smith Barney Inc. analyst John Jones. ``One of the things that would really help is if they're confident that demand overseas is strong enough to compensate'' for expected weakness in U.S. sales, Rueppel said. IBM's sales growth in Asia has been particularly strong in recent quarters. The company acknowledged ``execution'' issues in the third quarter, including software sales it failed to close, and fourth- quarter results may reveal whether those problems have been solved. ``IBM has been controlling their expenses very carefully all year,'' Jones said. The company stopped selling personal computers through stores in late 1999, and ``that looks very smart,'' now that industrywide PC sales growth has slowed, he said. Jones has a ``buy'' rating on the stock. Focus on Sales IBM shares fell 16 percent and four analysts cut their ratings on the stock Oct. 18, a day after the company said third- quarter sales hadn't met forecasts. Many analysts are still focusing on sales growth as a pivotal measure of IBM's performance, though the company has emphasized that cost-cutting, particularly through Internet-driven automation, is an equally valid path to boosting profit. Total sales have risen an average of 6.5 percent a year since 1995 and net income growth has risen an average of 21 percent a year under Chief Executive Louis Gerstner. That compares with rival Sun Microsystems Inc.'s sales growth of 22 percent and net income growth of 42 percent annually, and Hewlett-Packard Co.'s revenue growth of 12 percent and net income growth of 18 percent. IBM's shares slumped 21 percent in 2000, yet that was a smaller loss than rivals Microsoft Corp., Sun, Compaq Computer Corp. or Hewlett-Packard. Share prices of competitors Oracle Corp. and EMC Corp. gained for the year. After introducing the term ``e-business'' in 1997, IBM is now marketing itself as the premier technology infrastructure builder, helping companies connect employees and customers on any device, anywhere, using any computer operating system, to make business faster and easier. Two-thirds of IBM's revenue comes from the sale of software, specialized semiconductors for the communications industry and such services as technology consulting and running other companies' data centers and Web sites. Access More Information and Services Above ©2001 Bloomberg L.P. All rights reserved. Terms of Service, Privacy Policy and Trademarks.