IBM
International Business Machines (NYSE: IBM) reported sharply lower-than-expected earnings and lowered...
Article Summary
SELL- International Business Machines (NYSE: IBM) reported sharply lower-than-expected earnings and lowered full-year growth forecasts, with the company's cash-cow mainframe business down 42% and its stock plunging 25%, its biggest single-day decline ever.
- International Business Machines warned investors ahead of time that the earnings were worse than expected, with CEO Arvind Krishna publishing a letter to investors last week warning of abysmal revenue in International Business Machines's infrastructure category and profit margins taking a hit.
- The CEO and CFO spent the call insisting that this was a temporary blip and all would be well soon, with tens of customers that were due to buy a new mainframe opting not to do so due to high cost increases of 15% to 30% for data center gear and PCs.
- IBM earns $3 in software revenue for every $1 of mainframe hardware it sells, meaning the company still generates $9.9 billion in gross profit, nearly 58% margins, and $2.2 billion in net earnings for the quarter.
Free users see 3 BUY signals per day. Premium unlocks all of them, plus instant email alerts.
See Plans
Growth Stock Scoring Breakdown
| METRIC | VALUE | WEIGHT | ANALYSIS |
|---|---|---|---|
| Sales Growth TTM ? | 9.7% | 25% | 35.0 ptsBelow Screener (9.7%) - Weak growth |
| EPS Growth Next 5Y ? | 6.6% | 25% | 20.0 ptsWeak (6.6%) - Low expectations |
| Target Price Upside ? | 28.3% | 20% | 75.0 ptsSignificant Upside (28.3%) - Target: $264.10 vs Current: $205.77 |
| Gross Margin % ? | 57.8% | 15% | 80.0 ptsVery Healthy (57.8%) - High-quality margins |
| Drawdown from 52-Wk High ? | -38.1% | 15% | 80.0 ptsSolid Dip (-38.1%) - Good entry zone |
Disclaimer: This rating is for informational purposes only and is not financial advice.
All data sourced from Finviz.
Always conduct your own research and consult with a financial advisor before making investment decisions.
Past performance does not guarantee future results.
About IBM
- International Business Machines Corporation, together with its subsidiaries, provides integrated solutions and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
- It operates through Software, Consulting, Infrastructure, and Financing segments.
- The Software segment offers hybrid cloud and AI platforms that allow clients to realize their digital and AI transformations across the applications, data, and environments in which they operate.
- The Consulting segment delivers strategy and technology services and intelligent operations, providing business transformation, technology implementation, managed services, application modernization, and AI-powered solutions.
- The Infrastructure segment provides on-premises and cloud-based server, and storage solutions, as well as life-cycle services for hybrid cloud infrastructure deployment.
- Its Financing segment offers client and commercial financing, and facilitates IBM clients' acquisition of hardware, software, and services.
- It has strategic partnerships with various companies, including hyperscalers, service providers, global system integrators, and software and hardware vendors that include Adobe, Amazon Web Services, Microsoft, Oracle, Salesforce, Samsung Electronics and SAP, and others.
- Additionally, the company operate a data streaming platform.
- The company has a strategic collaboration with Arm Holdings plc for the development of new dual-architecture hardware that helps enterprises run future AI and data intensive workloads; and strategic partnership with three.ws to advance ai-powered 3d agent technology; has a collaboration with Lightwell to help strengthen open source software supply chain.
- The company was formerly known as Computing-Tabulating-Recording Co.
- International Business Machines Corporation was incorporated in 1911 and is headquartered in Armonk, New York.