IBM – It’s All In The Bottomline

IBM Sign
Aaron Brown: Photography
IBM Sign

All hands on deck this afternoon as we await IBM numbers after the close. CNBC’s earnings central team along with our experts will crunch the numbers as they hit the wires this afternoon at 4PM ET.

The consensus estimate for IBM is for $2.58 a share, with revenue at $24.2 billion, according to Thomson Reuters.

Our guy this afternoon with the instant analysis is Louis Miscioscia Senior Analyst & Research Director with Collins Stewart.

Miscioscia’s slightly below consensus estimate with revenue at $24.1 billion for 3.7% growth, about flat in constant currency (CC). However, he expects sales to rise in the next quarter to $24.7 billion where, in constant currency as enterprise spending for tech starts to aid IBM's top line. For 2010 Miscioscia expects earnings to be up 13%. So he’s looking for IBM to support earnings of "at least $11.20", which in non GAAP is $11.35.

Bottomline on IBM

Miscioscia says IBM has mainly been a bottom line story. “The company has done a masterful job of cutting cost in the downturn to continue to drive earnings growth of 12% in 2009 even with 8% down revenue,” says Miscioscia.

Buy Rating: $160 (12-month price target)

Miscioscia views as IBM's shares as a Buy for two reasons:

Consistent delivery of earnings growth

Top-line would begin to grow again as the economy bounced back, basically starting in the second half of 2010. Miscioscia’s looking for Enterprise spending to start to turn IBM from flat revenue growth, in CC to something positive in the low double digits.

Watch Closing Bellfor full analysis of IBM earnings.



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