Can IBM's Backlog Continue Its Earnings Momentum? (IBM)

After today’s close, we’ll get to see earnings out of International Business Machines Corp. (NYSE: IBM). The estimates for Big Blue from First Call are $1.45 EPS on $23.71 billion in revenues.  Next quarter estimates are $1.75 EPS on $25.32 billion in revenues. Estimates for fiscal Dec-2008 are $8.25 EPS on $104.76 billion in revenues.

If one company has scored in technology and IT-trends of late, it is IBM.  Shares are close to a 52-week high at a time everyone else is far from that.  The company’s backlog of $118 Billion and aggressive share buybacks are a major part of this, and investors will likely key in on those two issues today.

Options traders appear to be braced for a move of up to $3.25 or so in either direction, although that number was less yesterday before today’s near-2% gain to $119.40.  Analysts have an average price target north of $127.00.  The only issue at hand on the chart is that this has spent most of the last 6-weeks between $115.00 and $119.00 on trading.  IBM’s 52-week trading range is $93.91 to $121.46.

IBM has been one of the few steadily positive standouts in tech, while most of the sector has been having problems in at least one area of their operations.  As so much of IBM’s revenues are now from outside of the U.S., the weak dollar should be working in its favor.

Jon C. Ogg
April 16, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at [email protected] and he does not own securities in the companies he covers.