IBM (IBM) Trades Lower Into Fourth Quarter Earnings Report

IBM (NYSE: IBM) is down 1.1% into earnings after the close. Analysts on average are looking for EPS of $5.41 on revenues of $24.77 billion, representing a decline of 11% and 10%, respectively, from the fourth quarter of 2013.

Last quarter (Q3), the stock sold off 7.1% on the day immediately following the earnings report after a miss on both the top and bottom-line. In the quarter prior (Q2), the stock was flat on the day immediately following the earnings despite missing on the top-line and beating by 3 cents on the bottom-line.

In a preview ahead of the results, Bernstein's Toni Sacconaghi said they forecast IBM to deliver below consensus revenues, driven in part by currency. He lowered his revenue estimate to $24.4B from $24.5B to account for the stronger dollar. For EPS, they see EPS of $5.46. The analyst also expects a messy quarter given (1) the gain from the x86 server divestiture ($1B); (2) an expected material restructuring ($600M); (3) potential impact from the Yen (IBM can't fully hedge due to high local services content); and (4) other potential flexibility such as taxes and buybacks.

The analyst doesn't expect Q4 results to provide a catalyst for the company.

You May Also Be Interested In