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International Business Machines Corp. must show how the short-term pain of falling incomes will bear fruit as society moves more and more towards a more service-oriented activity.
IBM
IBM, -0.31%
should release its first quarter results after the close of trading on Tuesday.
Stifel analyst David Grossman, who bought something from IBM, said the first quarter was generally seasonal; he does not expect any change in IBM's outlook. In its latest earnings report, the company forecast adjusted earnings of at least $ 13.90 per share for the year.
Lily: IBM invaded San Francisco to prove that he was still a technological innovator
"The cognitive / software segment should be stable (flat +/-) since it comes from a very strong transactional 4Q18 and that it will always include pending divestments, which constitute an obstacle to growth, "Grossman said.
Sale and finalization of IBM's acquisition of Red Hat Inc.
RHT, -0.03%
Strengthening its hybrid cloud offerings should improve the basics of the cognitive sector, he said.
Earnings: Of the 18 analysts surveyed by FactSet, IBM is expected to average adjusted earnings of $ 2.22 per share, compared to $ 2.45 for the same quarter of the previous year. The current estimate is down from $ 2.26 per share expected at the beginning of the quarter. Estimize, a software platform that uses the crowdsourcing of hedge fund executives, brokerages, buy-side analysts and others, claims a profit of $ 2.27 per share.
Returned: Wall Street expects a turnover of $ 18.47 billion at IBM, a 3.2% decrease from the $ 19.07 billion in the same quarter of the year. last year, according to 17 analysts surveyed by FactSet. Current forecasts by analysts are down from the $ 18.78 billion expected at the beginning of the quarter. Estimize forecasts revenue of $ 18.75 billion.
Analysts surveyed by FactSet are expecting a 2.9% decline in the business's cognitive solution business, to $ 4.18 billion from the same quarter of the previous year. The technology services business and cloud platform business is expected to fall 4.4% to $ 8.25 billion. The technology services and cloud platform include IBM Cloud, formerly Bluemix.
World business services revenues are forecast to rise 0.4% to $ 4.19 billion, while systems revenues are expected to fall 8.6% to $ 1.37 billion from the same period from the previous year. Global business services include consulting services for the modernization of enterprise design and enterprise and cloud applications, while the Systems business includes the company's operating system software and mainframe activities, including IBM's lineup of z14 servers.
Movement of stock: IBM's shares have grown more than 17% since the company's last earnings report, which had annual earnings higher than Wall Street estimates. In comparison, the Dow Jones Industrial Average
DJIA, -0.10%
rose 8.3%, the S & P 500 index
SPX, -0.06%
gained 10.4% and the Nasdaq Composite, a high-tech index
COMP -0.10%
increased by more than 14% during this period.
What analysts say: Of the 21 analysts who cover IBM, six have a buy or overweight rating, 13 have a holding rating and two have an odds or underweight rating, with an average price target of $ 143.81. .
Moshe Katri, an analyst at Wedbush, has a neutral opinion and a target price of 165 USD. He estimates that "IBM's results will continue to be affected by the cannibalization of its former software / services business, which accounts for approximately 70% of its revenues."
Katri said management was trying to turn its revenues into high-growth services, but he needed to see more.
"However, for us to be more constructive on the name, we need to have indications that results at IBM standalone have stabilized," Katri said. "The closest example of a supplier who has managed to transform its revenue base into digital, both organically and through acquisitions, is superior to the Accenture ranking."
Katri said quarterly service bookings and reported backlog levels, as well as what the company said about trends in IT spending, will be significant.
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