As my pal @firstadopter on Twitter was first to point out:
"MULTIPLE questions from $IBM analysts "I'm confused" "I don't understand" "Sorry to re-visit" FCF/Net income/EPS guidance MAKES NO SENSE"
At first I thought he was exaggerating, but the transcript doesn't lie.
Let's start with confused. Barclays analyst Ben Reitzes gives us a twofer, given that he said both "confused" and "I don't understand":
I think investors are focused on this, of so I'm going to just try to clarify it on the free cash flow side. What I'm really confused about is that the charge was about $100 million lower than I thought, then we have the tax rate impact and the accelerated buyback, which is probably more than I think you guys probably modeled in January. With all that, you could have almost $1 billion taken out of the net income the Street had and still guide to $18.
And I wanted to know on cash flow, you said in your 10-K that you would grow cash flow by $1 billion year over year, and we just took out almost $1 billion of the net income versus where we were in January. I actually don't understand how we get to the free cash flow numbers previously guided in that -- taking it in that light. If you could just explain it that way, that would be really great. Thanks a lot.