IBM Quarterly Results Due amid Cautious Hope for Recovery

By Jessica Davis  |  Print this article Print

At least one analyst firm has raised its forecast for IBM's (NYSE: IBM) third-quarter results. Currency and cost-cutting initiatives are weighing in favor of IBM.

When IBM (NYSE: IBM) announces its third-quarter results today after market close, they will arrive in a market that is cautiously hoping that the positive signs it has seen recently are hinting of more good news to come. And analysts have been fueling that cautious optimism.

For example, this morning Bernstein Research raised its forecast for IBM’s Q3 results, saying it is expecting revenue of $23.7 billion, up from its previous estimate of $23.4 billion. Bernstein says the new estimate represents a decline in revenue of 5 percent at constant currency, which represents a modest improvement from the 7 percent decline IBM delivered in its last quarter.

Further, Bernstein is forecasting earnings per share (EPS) of $2.43, an increase from the previous forecast of $2.37. The firm says that it believes IBM can deliver on the higher estimate because of its strong cost-cutting initiatives.

"We are raising our revenue and EPS estimates for IBM for Q3 and Q4 and 2011 due to currency and increased conviction about cost-cutting savings," writes Toni Sacconaghi, senior analyst at Bernstein, in his report. "We see upside to revenues and EPS for Q3, and do believe that IBM is likely to modestly increase full-year EPS guidance for FY10."

Bernstein’s increase in its IBM forecast comes amid improving field checks by the firm. For example, Bernstein notes that based on field checks, IT spending appears to be improving in the United States and stabilizing in Europe.

"That said, it is difficult to gauge whether we are simply seeing traditional year-end seasonality or signs of a more sustained rebound in demand," writes Sacconaghi. "We do not believe it is the latter, as our CIO surveys and conversations point to limited opportunity for material increases in spending before year end."

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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