This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

IBM Discloses Details of 2009 Game Plan

SAN FRANCISCO - IBM's (IBM - Get Report) steadfast loyalty to its earnings projections may look too optimistic in light of the bruising companies are expected to take over the coming year.

The company said on Oct. 16 it is confident of delivering full-year EPS of at least $8.75 a share, implying fourth-quarter earnings of $3.07, or 9.6% growth year over year, in line with analysts' estimates, according to Thomson Reuters.

IBM also held fast to its long-term earnings roadmap, which sets an end-point EPS goal of $10 to $11 in 2010. The company has not yet projected 2009 earnings. Yet Gartner has cut its 2009 worldwide IT spending growth projection by more than half, to 2.3%, with the U.S. market most affected by frozen budgets.

Analysts now expect 2009 earnings of $9.24 a share, down from $9.34 in early October and $9.59 in July. The consensus estimate predicts earnings growth of 5.6%, or 49 cents, above IBM's projection for 2008 earnings of $8.75.

IBM's 2009 sales determine the company's longer-term earnings performance, as revenue is recognized over time. CFO Mark Loughridge said on the conference call that he is confident IBM can stick to its 2010 EPS target of $10 "on operational performance and maybe even exceed that."

By cutting expenses over the past two years, particularly in developed markets, IBM has delivered margin improvements that will see it through a tough economy.

Another driver is annuity-based revenue. As IBM signs multi-year contracts that create a regular revenue stream, it is upholding pricing levels that grow margins, Loughridge said. Discounting would undercut margins.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BMC $0.00 0.00%
CA $31.74 0.00%
HPQ $33.07 0.00%
IBM $170.73 0.00%
MSF $15.93 0.00%


DOW 18,037.97 -42.17 -0.23%
S&P 500 2,108.92 -8.77 -0.41%
NASDAQ 5,060.2460 -31.8390 -0.63%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs