IBM Gives Optimistic View but Few Specifics

IBMIBM continues to believe its earnings per share can grow in the double digits in the long term, CFO John Joyce said during Big Blue's analyst day Thursday.

Based on the company's use of capital, its cash flow and leverage in operating margins with its PricewaterhouseCoopers acquisition, IBM is looking to grow earnings per share in the double digits and continues to believe it can do so over the long term, Joyce said. But he did not provide a specific period of time.

"We believe that we will grow our profits through our gain-share strategy," Joyce said. "Our cash flow position is excellent and we think we'll be able to utilize that."

IBM executives did not provide specific financial guidance, which was not a major surprise because they've remained mum on its numbers at past analyst days. They also refused to give any more details about the economic picture beyond what CEO Sam Palmisano said in October, when he reported IBM is "beginning to see signs that the economy is stabilizing."

Joyce said IBM believes the IT industry will grow faster than GDP but refused to predict how fast the economy is going to grow next year. "Businesses are starting to take some risks," he said.

Instead, IBM executives spent most of the time extolling the benefits of their acquisition of PricewaterhouseCoopers, e-business on demand strategy and focus on industry-specific solutions.

Sanford C. Bernstein analyst Toni Sacconaghi, who has a market perform rating on IBM, pressed Joyce at the meeting to explain why it's a positive that IBM's lowest margin business -- services -- is growing the fastest. Joyce effectively skirted the question, reiterating past forecasts that the PWC business will lose money in the first half of the year and then make money in the second half. (Bernstein doesn't do investment banking.)