International Business Machines Corp. (NYSE: IBM) managed to beat earnings expectations, as most would have expected. The company reported earnings at $1.97 EPS and $22.9 billion in revenues, which compared to Thomson Reuters estimates of $0.93 EPS and $22.75 billion in revenues. This translates to earnings growth of about 16% and revenue growth of 5%, or flat after adjusting for currencies. While the earnings are ahead of estimates, some wanted more and there are some concerns about what lies ahead.
IBM came in with 43.6% in margins, which might be a tad soft compared to some talk of 44%. Here was a brief breakdown: 4% growth in technology services; software grew 11%; systems & technology rose 5%. Services signings were $12.3 billion, down 2%. Global Financing revenues fell 7% (12% if adjusted for currency).
The services backlog came in at $134 billion, which is up $8 billion versus a year ago. However, we would note that backlog was $137 billion just one quarter ago.
IBM is also raising guidance now to at least $11.20 EPS versus an earlier formal target of “at least $11.00 EPS” before and a $10.00 to $11.00 EPS range before that.
IBM ended the quarter with $14 billion in cash and it generated free cash flow of $1.4 billion; it also returned $4.7 billion to shareholders via $700 million in dividends and $4 billion in share repurchases. IBM’s tax rate in the first-quarter 2010 was 26.0% versus with 26.5% in the year ago quarter.
IBM closed up 1.2% at $132.23, but shares are down 1.5% at $130.40 in the after-hours session. Its 52-week trading range is $98.20 to $134.25.
The top-line and bottom-line numbers may be fine here, but stocks have to beat better than this to entice new buyers now. That backlog is also worth watching ahead as that is the future of its forward orders for the future ahead.
JON C. OGG
The Average American Has No Idea How Much Money You Can Make Today (Sponsor)
The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.
But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.