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IBM Earnings Preview: What Wall Street's Thinking

Cantor Fitzgerald analyst Brian White (Buy, $220 PT)

"After the close this Thursday (7/17), IBM is scheduled to report its 2Q:14 earnings results with a conference call at 4:30 PM ET. In recent quarters, IBM's results have been characterized by revenue misses with lackluster profit performance driven by muted IT spending, weakness in hardware, softening trends in growth markets and other issues. Since the end of 2011, IBM's stock has risen by just 2% compared to a greater than 56% increase for the S&P 500 Index. In our view, either IBM needs to begin demonstrating to investors that the company is turning the corner or we believe a "shake up" at the company could occur."

JPMorgan analyst Tien-tsin Huang (Neutral, $197 PT)

"We expect 2Q hardware revenue to decline in mid twenties, inline with the decline rate in 1Q. We expect steady MIPS and revenue trends in System-z at the bottom of the refresh cycle, while Power systems could continue underperforming at the low end. We also estimate steady low single digit growth in s/w, as full quarter contribution from the Cloudant acquisition should be offset by tough comps. We expect continued mid single digit growth in Key Branded Middleware."

Credit Suisse analyst Kulbinder Garcha (Underperform, $160 PT)

"Our 2Q14 revenue/EPS estimates stand at $24.3bn/$4.33 vs. consensus of $24.1bn/$4.29. We continue to believe that IBM will see declining organic growth due to high mainframe exposure coupled with slower ramp to high value growth in services and software and struggle to achieve 100% FCF conversion. We reiterate our Underperform rating and $160 target price."

--Written by Chris Ciaccia in New York

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