IBM (IBM) Shares Higher on Solid Fourth Quarter, Guidance

Shares of International Business Machines Corp. (IBM: Charts, News) gained +7.83 or +3.99 percent to $203.91 per share in afterhours trading on Tuesday, after the company reported a six percent increase in 2012 fourth quarter earnings.

IBM stock had closed at $196.08 per share, up +1.61or +0.83 percent in the regular trading session on Tuesday. The better than expected results were mostly driven by profits from its software division, which was also the only unit with increased revenue in the fourth quarter. In addition to higher earnings, the company also improved its guidance for 2013 earnings. Daily Chart
Armonk, New York based International Business Machines Corp. is the world's largest provider of computer services, with over 433,000 employees and operations spanning the globe. The company's main business comes from the manufacture of computer hardware and software, infrastructure and hosting services and consulting services for a variety of advanced technologies. IBM earnings for 2012's Q4, announced after the bell on Tuesday, were $5.83 billion, or $5.13 per share, compared to $5.49 billion, or $4.62 per share in the same period one year ago, an increase of six percent. Results included special items related the company's pension plan and to recent acquisitions, excluding those items, earnings came to $5.39 per share, versus the analyst consensus of $5.25 per share. Revenue for the quarter was lower, sliding less than one percent from $29.49 billion to $29.3 billion, mainly due to currency fluctuations on overseas sales. The analyst consensus for revenue in Q4 was for $29.12 billion. Revenue from hardware sales fell one percent to $5.8 billion, while revenue from services fell by two percent to $10.3 billion. Software sales revenue, the only sector showing improvement in the quarter, increased three percent to $7.9 billion. Yearly earnings for 2012 came to $16.6 billion, or $14.37 per share, compared to $15.86 billion, or $13.06 per share in 2011. Adjusted for some items, 2012's earnings came to $15.25 per share, versus analyst expectations of $15.14 per share. Nevertheless, revenue fell year on year, from $106.9 billion in 2011, to $104.5 billion, still better than analyst expectations of $104.4 billion. In a conference call after the earnings release, Mark Loughridge, the company's chief financial officer, noted that the fourth quarter was "very, very strong" and that, "Our new hardware product introductions really performed in the quarter. We had excellent acceptance of our new mainframe and our System Z revenue was up 56% year to year, so it's been a very successful launch. Not only in major markets, but in growth markets where we were up 65%. And we had significant growth in our mainframe specialty engines led by Linux. This is a good indicator, not only of new workloads moving onto the platform, but also the value of a vertically integrated system." IBM spent $12 billion buying back its own stock last year. The company's guidance for 2013 is for earnings of at least $15.53 per share, with adjusted earnings topping $16.70, this compares to analyst expectations of $16.65 per share. Long term, the company expects to earn at least $20 per share by 2015 with more than half of its profits coming from the software sector. Other News About IBM IBM Wraps Up Kenexa Buy, Expands Talent Management Offerings Acquisition adds to IBM's social business and human resource offerings. Mid-Hudson Operations Garner 675 Patents for IBM IBM has been the company with most patents for 20 years in a row. Other Stocks in the News Google's 4Q Earnings Rise Despite Motorola Woes Google announces higher quarterly earnings. Apple Results Not Just About iPhone Sales Company's earnings to be releases later today. Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Jan 23, 2013
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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