International Business Machines Corp. (IBM) Outperforms Analyst Expectations

Page 1 of 2

International Business Machines (NYSE: IBM), a multinational technology company with revenue exceeding $100 billion, announced their Q4 2012 results on Jan. 22. IBM reported quarterly revenue of $29.30 billion and EPS of $5.39, which sent shares up by over 4% on Jan. 23.

Let us look at the following figure. Year-over-year growth in revenue is negative for the December quarter, but EPS has increased many fold. This shows that the company has made significant reductions in costs for the December quarter, a trend that is reflecting in the annual data as well.

Revenue Analysis

Revenues from EMEA were $9.1 billion, 5% less than the previous year. Asia Pacific revenue saw an increase of 4%. OEM revenues decreased 5% to $679 million, while revenue from BRIC (Brazil, Russia, India and China) countries increased by 11%.

Sector data shows us that revenue from the global technology services segment decreased by 2% and global business services revenue came down by 3%. Revenue from the Software Segment increased by 3% and revenue from key middleware products increased by 5%. Operating Systems revenue was $709 million, in line with last year’s revenue, while Information Management Systems revenues increased by 2%. Revenue from the systems and technology segment came down by 1%, and Global Financing segment revenues were down 2%.

IBM reported quarterly revenues of $29.3 billion, far ahead of the analyst expectations of $24.7 billion, and non-GAAP EPS of $5.39, up from the analyst expectations of $5.25.

IBM projects non-GAAP EPS of $16.70 for 2013, as well as an EPS of $16.64 for 2013. The company also plans to increase EPS to $20 by 2015. IBM expects to invest more in areas like Big Data, Mobile Solutions, Social Business, and Security with the aim of expanding into new geographies.

Competition Scenario

The main competitors for IBM are Accenture Plc (NYSE:ACN), Hewlett-Packard Company (NYSE: HPQ) and Microsoft Corporation (NASDAQ: MSFT).

All these companies are established brand names and pose a serious threat to IBM’s revenue. IBM is shifting focus from hardware sales to software services, and companies like Accenture hold a strong market share in this segment. Accenture has great market credibility, and its ability to do quality work at low prices internationally sets it apart from other companies.

Hewlett Packard has a strong presence in the hardware sector. HP will fade out as IBM’s competitor if it is unable to move towards software services, as IBM is already highly focused on software products and services. In the last few months, with declining PC sales overall, HP’s main business line has been under threat. It surprises me that companies like these, with an established presence in the market for so many years, take this much time to understand and adapt to changing market trends. HP has an urgent need to start molding itself to the smartphone world to be able to remain relevant.

Microsoft has a strong presence in the software products segment, and in order to beat this competition IBM will have to invest a lot in innovation for developing cost effective and solution-driven software products which can stand up to the market expectations. It too has been hit, although less hard and for different reasons, by declining PC sales. However, it has begun to slowly adapt itself to the changing scenario by brining out the Windows 8/RT; it remains to be seen how it can bring these products to the market in a more developed condition.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!