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IBM Reports Below Consensus
By Zacks Investment Research on April 21, 2009 | More Posts By Zacks Investment Research | Author's Website
IBM Corp. (IBM) reported revenue and earnings that were below consensus. However, the company reiterated its goal of $9.20 EPS for 2009.
The largest error on the revenue forecast was the net effect of currency fluctuations. Although net sales declined by just over 11%, the currency neutral decline was only 4%
Most of the revenue shortfall was in the Systems & Technology Group and the Software Group. Gross margins improved by two percentage points, but some of the improvement was due to currency translations from weak local currencies to the US dollar.
The bulk of the workforce rebalancing charge was taken in the first quarter with (relatively) small amounts to be taken over the rest of the year. The balance sheet continues to improve as the company experienced strong cash flow, reduced debt and increased cash to over $12 billion.
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