IBM Jumps 2% After Hours After Earnings Beat, Guidance Hike, Despite Margin Miss

Tyler Durden's picture

From the Press release:

  • Diluted EPS:
    • GAAP: $2.31, up 17 percent;
    • Operating (non-GAAP): $2.41, up 21 percent; Above consensus of $2.30
  • Revenue: $24.6 billion, up 8 percent, up 5 percent adjusting for
    currency; Above consensus of $24.0 billion
  • Gross profit margin:
    • GAAP: 44.1 percent, up 0.5 points; Below consensus of 44.6%
    • Operating (non-GAAP): 44.5 percent, up 0.8 points;
  • Net income:
    • GAAP: $2.9 billion, up 10 percent;
    • Operating (non-GAAP): $3.0 billion, up 13 percent;
  • Pre-tax income:
    • GAAP: $3.8 billion, up 9 percent;
    • Operating (non-GAAP): $4.0 billion, up 12 percent;
  • Software revenue excluding divested PLM operations up 10 percent, 8
    percent adjusting for currency; 6 percent including PLM, 4 percent
    adjusting for currency;
  • Systems and Technology revenue up 19 percent, 16 percent adjusting
    for currency;
  • System z mainframe revenue up 41 percent; MIPS up 34 percent;
  • Services revenue up 6 percent, 3 percent adjusting for currency;
  • Services backlog of $142 billion, up $8 billion;
  • Growth markets revenue up 18 percent, 12 percent adjusting for
    currency;
  • Business analytics revenue up 20 percent;
  • Smarter Planet revenue up 20 percent;
  • Cloud revenue 5 times first-quarter 2010 revenue;
  • Full-year 2011 Operating (non-GAAP) EPS expectations raised to at
    least $13.15 from at least $13.00.

And the balance:

IBM (NYSE:IBM - News) today announced first-quarter 2011 diluted earnings of
$2.31 per share, compared with diluted earnings of $1.97 per share in
the first quarter of 2010, an increase of 17 percent. Operating
(non-GAAP) diluted earnings were $2.41 per share, compared with
operating diluted earnings of $2.00 per share in the first quarter of
2010, an increase of 21 percent.

First-quarter net income was $2.9 billion compared with $2.6 billion in
the first quarter of 2010, an increase of 10 percent. Operating
(non-GAAP) net income was $3.0 billion compared with $2.6 billion in the
first quarter of 2010, an increase of 13 percent.

Total revenues for the first quarter of 2011 of $24.6 billion increased
8 percent (5 percent, adjusting for currency) from the first quarter of
2010.

“We delivered a strong first quarter with revenue growth across
hardware, software and services and with more than 40 countries growing
in double digits. We continued to see excellent momentum in our growth
initiatives - smarter planet, cloud, business analytics, and growth
markets - which bring together the full value of the IBM portfolio,"
said Samuel J. Palmisano, IBM chairman, president and chief executive
officer. "We achieved broad-based margin improvement, while our cash
flow and strong financial position enabled us to continue to return
value to our shareholders.

"On the strength of this performance, we are raising our full-year 2011
operating earnings per share expectations to at least $13.15.”

First-Quarter GAAP – Operating (non-GAAP) Reconciliation

First-quarter operating (non-GAAP) diluted earnings exclude $0.10 per
share of charges: $0.09 per share for the amortization of purchased
intangible assets and other acquisition-related charges, and $0.01 per
share for retirement-related charges driven by changes to plan assets
and liabilities primarily related to market performance.

Full-Year 2011 Expectations

IBM raised its expectations for full-year 2011 GAAP diluted earnings per
share to at least $12.73 from at least $12.56; and operating (non-GAAP)
diluted earnings per share to at least $13.15 from at least $13.00. The
2011 operating (non-GAAP) earnings exclude $0.42 per share of charges
for amortization of purchased intangible assets, other
acquisition-related charges, and retirement-related charges driven by
changes to plan assets and liabilities primarily related to market
performance.

Geographic Regions

The Americas’ first-quarter revenues were $10.3 billion, an increase of
9 percent (8 percent, adjusting for currency) from the 2010 period.
Revenues from Europe/Middle East/Africa were $7.8 billion, up 3 percent
(2 percent, adjusting for currency). Asia-Pacific revenues increased 12
percent (4 percent, adjusting for currency) to $5.9 billion. OEM
revenues were $600 million, up 13 percent compared with the 2010 first
quarter.

Growth Markets

Revenues from the company’s growth markets increased 18 percent (12
percent, adjusting for currency). Revenues in the BRIC countries —
Brazil, Russia, India and China — increased 26 percent (22 percent,
adjusting for currency). Growth markets revenue represents 21 percent of
IBM’s total geographic revenue for the first quarter.

Services

Total Global Services revenues increased 6 percent (3 percent, adjusting
for currency). Global Technology Services segment revenues increased 6
percent (3 percent, adjusting for currency) to $9.9 billion. Global
Business Services segment revenues were up 7 percent (3 percent,
adjusting for currency) at $4.7 billion.

Global Services pre-tax income increased to $1.9 billion, up 34 percent
year over year. Pre-tax income from Global Technology Services increased
29 percent and pre-tax margin increased to 12.2 percent (10 percent and
13.3 percent, respectively, when adjusted for workforce rebalancing
charges in the first quarters of 2010 and 2011). Global Business
Services pre-tax income increased 44 percent and pre-tax margin
increased to 13.0 percent (19 percent and 14.0 percent, respectively,
when adjusted for workforce rebalancing charges in the first quarters of
2010 and 2011).

The estimated services backlog at March 31 was $142 billion, up $8
billion year over year at actual rates ($1.5 billion, adjusting for
currency).

Software

Revenues from the Software segment were $5.3 billion, an increase of 6
percent (4 percent, adjusting for currency), or 10 percent (8 percent,
adjusting for currency) excluding the first-quarter 2010 divestiture of
the Product Lifecycle Management operations (PLM), compared with the
first quarter of 2010. Software pre-tax income of $1.7 billion was down
18 percent (up 9 percent when adjusted for the gain on the sale of IBM’s
PLM operations in first-quarter 2010 and for workforce rebalancing
charges in the first quarters of 2010 and 2011) year over year.

Revenues from IBM’s key middleware products, which include WebSphere,
Information Management, Tivoli, Lotus and Rational products, were $3.3
billion, an increase of 16 percent (14 percent, adjusting for currency)
versus the first quarter of 2010. Operating systems revenues of $542
million increased 9 percent (7 percent, adjusting for currency) compared
with the prior-year quarter.

Revenues from the WebSphere family of software products increased 51
percent year over year. Information Management software revenues
increased 13 percent. Revenues from Tivoli software increased 8 percent.
Revenues from Lotus software increased 1 percent, and Rational software
increased 5 percent.

Revenues from the company’s business analytics operations across
services and software segments increased 20 percent.

Hardware

Revenues from the Systems and Technology segment totaled $4.0 billion
for the quarter, up 19 percent (16 percent, adjusting for currency) from
the first quarter of 2010. Systems and Technology pre-tax income was
$132 million, an increase of $329 million.

Systems revenues increased 18 percent (16 percent, adjusting for
currency). Revenues from System z mainframe server products increased 41
percent compared with the year-ago period. Total delivery of System z
computing power, as measured in MIPS (millions of instructions per
second), increased 34 percent. Revenues from Power Systems increased 19
percent compared with the 2010 period. Revenues from System x increased
13 percent. Revenues from System Storage increased 10 percent, and
revenues from Retail Store Solutions increased 18 percent year over
year. Revenues from Microelectronics OEM increased 23 percent.

Financing

Global Financing segment revenues decreased 4 percent (6 percent,
adjusting for currency) in the first quarter to $516 million. Pre-tax
income for the segment increased 22 percent to $519 million.

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Buckaroo Banzai's picture

"Earnings Beet"! Does that mean that, despite that fact that it was pulled out of some moist brown stuff, it is still a sweet, purple-colored treat?

oh_bama's picture

DID I TELL THE LOSERS TO BTFD???

HEHE

  • WHAT IF YOU TRUSTED THE FED AND THE GOVERMENT?
    WHAT IF YOU UNDERSTAND DEEPLY WHAT QEs ARE?
  • WHAT IF YOU SUPPORTED THE TROOPS?

IF YOU DID ALL OF ABOVE? YOU WOULD HAVE MADE A TON OF MONEY!!!!!

traderjoe's picture

Not sure if you are sarcastic or not. Or you could distrust everything, have purchased silver, and 'made' a ton of money.

p.s. Please stop shouting.

SheepDog-One's picture

Probably means it will be down 5% tomorrow.

Cdad's picture

Happens four times per year.  Not on IBM...but on INTC.  It prints its high right about now, and sells into oblivion the following day, taking the tech trade down with it.  And so the chimps are printing the top and setting the short on it...'nother day, 'nother counterfeit dollar printed, jammed into a bank, fed into a computer, pooled up, jacked in...and scalped.

The New American Marxist/Banker Party would like to thank you for chasing cars.

TruthInSunshine's picture

INTC is like a sterile bull. It just sits there and eats people's wealth.

Dead weight on four hoofs.

ghostfaceinvestah's picture

Are you sure you're not talking about CSCO?

At least INTC pays a measley dividend.  CSCO is a true black hole.

Cdad's picture

Brother Truth,

Was it you or brother Cog...who wrote last qtr that after a $50 run it will be time to short NFLX?  Either way, it looks like tomorrow might be that day.  

As for Intel and Cisco...these names remain hung over from 2001.  It is amazing...but there it is.  The Nasdaq is Apple...period.  Until tomorrow, that is.

Hell of a fake, shitty world...

 

TruthInSunshine's picture

Had to have been CogDis.

The easy money in this festering pig of a casino has been made. That writing is on the wall.

When it all burns down again this year, the sheeple who get sheared will get that thousand yard, glazed look in their eyes.

But at least there are fewer of them participating in the parlor vs 3 years ago.

Racer's picture

Great thing currency destruction for earnings surging past guestimates eh....

plocequ1's picture

Dont forget Jnpr, Up $2.00. 

RobotTrader's picture

Heh, my INTC is skying 6% in the after life.

And so many of you guys were dissing me big time for buying that last week.

LOL.........

Careless Whisper's picture

take the money and run. the chart looks horrible. but nice trade anyways.

The Axe's picture

Great job on INTC....excellent earnings and balance sheet....

RobotTrader's picture

Short sellers getting creamed after hours.

Careless Whisper's picture

ah dewd, u spoke a little too soon. i'm seeing ibm going red. 163. ooops. something someone said?

SheepDog-One's picture

No problem, Robo will now just say he sold the top.

TruthInSunshine's picture

He bought it at the 09 bottom at just sold about 15% minutes ago before it gapped down...like he does with every stock.

Cdad's picture

Short sellers getting creamed after hours.

 

Robo,

What are you talking about?  Assless jeans have not budged.  Burritos...nothin'.  The snap back in steel stocks...oh, what a sickly rally....classic UnicornDew powered move.  

As for the winners, they could not wait even five minutes to sell them...

I'm concerned, Robo.  Are you well today?

Twice a Day's picture

Made a major mistake and inadvertently junked

RT's comment. Will not happen again, 1st time on

this site, very new, sorry.

TruthInSunshine's picture

Watch it gap down now.

Look at the valuation of IBM - this is more insane than 2007, especially with what there is to look forward to.

Make sure you don't Seven Out, mofos.

SheepDog-One's picture

Massive P/E's, eeking out small Special Olympics earnings pole vaults over a bar buried in the ground.

Cdad's picture

...and the trade is already over.  Don't you love the New America?

SheepDog-One's picture

Just great...well guys like Robo are impressed.

Cdad's picture

You know Dog....if I only had $8 billion from POMO and a super computer co located in the room next to where Duncan Niederauer takes his afternoon dump, I coulda made that sweet trade, too.

Now...three hours of jibber jabber, reverse psycology, we know that you know that we know bobbing and weaving, followed by, "Historically cheap valuations that long term investors should...." yada yada...and bingo...profit!

Who needs a fucking job anymore?  Just print money and give it to me!

The only question regarding DC and this entire mess is...who is going to have the courage to drag Ben Bernanke out of that damn Eccles building...and save the nation.  Everything else is hyperbole.

SheepDog-One's picture

Drive by with high pressure fire hoses and evict them like rats!

Cdad's picture

The price of gold alone should inform those who have the power to remove Ben Bernanke from his station.  It is not complicated...like criminal syndicate Wall Street bankers would like to make you think.  

And indeed, a fire hose would be the best method....'cause that would shut down all those co located computers in the room next to where Duncan Niederauer takes his afternoon crap...which would be a nice secondary effect.

 

TooBearish's picture

What's margin compression? Just BTFD....

plocequ1's picture

Just another Harvard term that Louis Rukeyser used to throw around back in the Flintstone days that means shit today. You know, Hindenberg Omen, Death cross, EPS, PE. Who cares? BTFD

RobotTrader's picture

Probably buy some Toyota tomorrow.  That thing is down big from the highs.  Nikkei futures getting bounced hard right now.

equity_momo's picture

Someone should set up a retail crossing network where we can deal directly and bypass the parasites. I'll gladly take the other side of your trades Robo. Just buzz me everytime you have a brainfart.

Pain Train's picture

Sellin' more calculators, bitchezzz! (Sorry. Longtime reader but first comment. I've been dying to do that.)

Northeaster's picture

Strange they didn't mention all the layoffs that somehow went under the media radar.

max2205's picture

MCD HIRED 50,000 HOMELESS TODAY...RELAX

HUGE_Gamma's picture

Anyone just hear Piper Intel Analyst on Bloomberg? guy was talking silly

RobotTrader's picture

Probably see a lot of hedge funds take profits in GLD and SLV to chase some of these tech stock screamers bouncing off the lows.

equity_momo's picture

You're probably right. And what will happen is GLD and SLV will blip down a nano-fart before continuing their 10 year bull run whilst that shyte you pimp will continue to devalue.  Dont worry though RT , whilst this system is intact there will always be a welfare check for you and a project to move into. Heaven forbid when the system inevitably implodes though - turning tricks for the local mack isnt going to be enough anymore.

Sucker.

The Axe's picture

HOLY SLAP SHOT BATMAN    IBM   hit the shithouse....lol

tmosley's picture

I think we'll see a lot more failure and hindsight from you.

ZakuKommander's picture

The vitriol you unleash for merely commenting on the mentality that drives the markets is undeserved.  

treemagnet's picture

Takes serious software to keep track of this ponzi.

equity_momo's picture

Short into this pop right now.   This is a guaranteed slam dunk fade within a week.

johngaltfla's picture

No doubt, that was a nice profit if you hit it at 164-165...

equity_momo's picture

Youre right , i was working on 2010 timeline. This ponzi is RIP.  The juice is running out boyz. As someone here signs off :

prepare accordingly. 

max2205's picture

TD somebody read this and slammed it...nice headfake