IBM Posts Big Blue Earnings (IBM)

International Business Machines Corp. (NYSE: IBM) reported earnings after the close.  Big Blue reported earnings growth of 16% with $4.18 EPS and a 7% growth to a record $29.0 billion in revenues.  Thomson Reuters had estimates of $4.08 EPS and $28.26 billion in revenues.  Gross profit margin was put at 49%, up 0.8 points; Free cash flow grew by $1.5 billion to $8.7 billion.

The services backlog was $142 billion versus $134 billion reported just one quarter back, for gains of $8 billion sequentially and $5 billion more than a year ago.  IBM offered  guidance of GAAP EPS of at least $12.56 and operating (non-GAAP) EPS of at least $13.00.  The company further noted that it is on track for its 2015 roadmap of $20.00 per share.  The consensus estimate for all of 2011 is $12.58 EPS and $103.14 billion in revenues.

As far as the individual unit break-down:

• Software revenue excluding divested PLM operations up 11%; 12% adjusting for currency; 7% including PLM;
• Systems and Technology revenue was up 21%, 22% adjusting for currency;
• System z mainframe revenue rose 69%; MIPS rose 58%;
• Services revenue up 2% as reported and adjusting for currency;
• Growth markets revenue rose 15%, 13% adjusting for currency;
• Business analytics revenue rose 19%.

As a reminder, this was a game-changer for IBM on how it reports.  It is now starting to issue earnings segments and breaking out GAAP and non-GAAP data.  That may cause some confusion, but the after-hours reaction is speaking for itself.

Shares hit yet another 52-week high and all-time high of $151.46, and that compared to under $140 per share back in October.  The closing price was up 0.4% at $150.65 and the after-hours session has shares trading up another 2.8% at $154.91.

JON C. OGG