IBM Scores While Others Can't (IBM)

International Business Machines (NYSE: IBM) has posted some mixed earnings with earnings at $3.28 EPS and revenue at $27.01 billion.  Thomson Reuters (First Call) had estimates of $3.03 EPS and $28.05 billion in revenue. The guidance is much more important.

The company said that total Global Services revenue fell 4% (up 2%adjusting for currency) to $9.6 billion, while its revenue from itssoftware segment was up 3% (up 9% adjusting for currency) to $6.4billion.  Revenues from the Systems and Technology business was $5.4billion for the quarter.  While this S&T revenue is a drop of 20%,that decrease is far less than expected.  IBM’s total gross profitmargin was also 47.9% for Q4-2008, compared with 44.9% in the 2007 period.

The company put its currency-adjusted services backlog as of December 31, 2007 at approximately $117 billion.

What is most important is the $9.20 EPS target for 2009.  Thisrepresents a gain of about 3% for the year despite the woes seen in thebroader economy.  Consensus was only $8.75 EPS.

Solid guidance is key here.  Shares closed down almost 3.5% at $81.98in regular trading.  All those losses are being taken back as sharesare back up at $85.10 in active after-hours trading.

Jon C. Ogg
January 20, 2009