IBM Earnings Verdict: Financial Engineering Lives On and On

Here was the full updated 24/7 Wall St. earnings preview for IBM.

IBM’s reported earnings per share of $4.32 on revenues of $24.4 billion. The Thomson Reuters consensus earnings estimates were $4.29 EPS and $24.13 billion in revenue, and the report from WhisperNumber.com indicated that a whisper number on IBM was $4.31 EPS.

On guidance, IBM sees earnings of at least $17.00 per share net and $18.00 per share on an adjusted basis for all of 2014. Estimates for this year are $17.87 EPS adjusted (versus $16.28 a year ago) on a 2.4% revenue drop to $97.4 billion.

This report is still evidence of financial engineering to beat earnings. While IBM has maintained a dead-on target of $20.00 in earnings per share by the end of 2015, the Thomson Reuters consensus estimate for 2015 is $19.78 EPS.

This was also another service orders backlog decline. That backlog shrank to $136 billion from $138 billion. Still, IBM counts its gross margin at 49.1%.

Keep in mind that IBM is the second largest DJIA component by weighting (over 7%). We had noted that shares had been rallying ahead of the report. IBM shares closed up only 13-cents at $192.49, and the after-hours price movement first saw shares pop – only to be down almost $1 on last look.