Friday, January 25, 2013

IBM Q1 Revs, EPS Top Street Ests; Raises Full Year Guidance

IBM (IBM) this afternoon posted Q1 revenue of $22.9 billion, up 5% from a year ago, or flat adjusted for currency, and slightly above the Street at $22.75 billion. Diluted EPS of $1.97 a share was four cents above the Street consensus at $1.93. Revenues were down from the $27.5 billion reported in the seasonally stronger Q4.

Gross margin was 43.6%, up 0.2 points from a year ago, but down from 48.3% in Q4.

Software revenue was up 11%, or 5% adjusted for currency; systems and technology revenue was up 5%, or 2% adjusted for currency; services revenue was up 4%, or down 2% adjusted for currency.

Services bookings were $12.3 billion, down 2%, although consulting services signings were up 18% and strategic outsourcing signings were up 6%.

IBM also said it now sees 2010 EPS of at least $11.20 a share, which is up from previous guidance of $11. The Street has been expecting $11.12.

The company said it expects to report constant-currency revenue growth in Q2.

A few other key items:

  • Revenue was up 2% in the Americas, but flat adjusted for currency.
  • EMEA was up 5%, but down 2% adjusted for currency.
  • Asia-Pacific was up 10%, or 1% adjusted for currency.
  • Tax rate fell to 26%, from 26.5% a year ago.
  • The company has $14 billion in cash on hand; debt is $26.3 billion, up from $26.1 billion at year end.
  • IBM repurchased $4 billion of stock in the quarter.

IBM in late trading is down $2.39, or 1.8%, to $129.84.

So what’s wrong? Looks like the hardware-focused systems business was a little light; gross margin was expected to be a bit higher; and the lower bookings may not be well received.

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