With competitors sending mixed signals, what must you know about IBM ahead of Thursday earnings?
Investors are hoping to hear that IBM kept chugging along in the second quarter, wringing out better profits despite slumping sales, in an unsettled technology market that continues to see pockets of sustained weakness.
Competitors' results were mixed to midland although IBM competes in so many areas it's often hard to draw direct comparisons.
Looking at Oracle's latest results, they show customers were still tightfisted about upgrading to new software while Hewlett-Packard reported a lower-than-expected sales forecast.
At best the results from those two rivals should hardly spark optimism. But ahead of earnings IBM shares advanced. It appears investors are betting that IBM will be able to stay above the fray and protect, even improve, its profit margins.
What should you expect?
Analysts polled by Thomson Reuters expect IBM to earn $2.02 per share on $23.59 billion in sales. In the same quarter last year, IBM had profit of $1.97 per share and revenue of $26.82 billion.
Bob Djurdjevic with Annex Research says the results from IBM's competitors show that "the lines are pointing southward. "It's a difficult time economically for the IT companies, but at the same time the stock prices are up," he says. "I'd say I'd be surprised if we had stellar results not just from IBM, but from anyone, based on what we've seen in the last 6 months."
However Zach Karabell of RiverTwice holds a very different view. He tells the traders, "I think this is a stock that has been chronically misunderstood, says Zach Karabell. It is so vital to the global business environment that as far as I’m concerned, it remains under-priced."
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