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IBM Reports Worst Sales Since 2002; EPS Beats On Aggressive Buybacks, Cut In Tax Rate
Moments ago IBM reported results that "beat" expectations, with non-GAAP EPS printing at $2.91 vs consensus looking for $2.80. Why did IBM "beat" expectations? Because this is what happened to expectations in the past few weeks: a desperate scramble to lower the bogey just so IBM could print at least a few cents above it.
If one ignores expectations, this is what happened to the overall business: revenues of $19.6 billion were the worst since Q1 of 2002!
The annual collapse in revenue is just shy of that recorded during the financial crisis, with another consecutive Y/Y 11.9% drop in a row.
A more detailed breakdown of what actually happened:
- Revenue dropped by 11.9% to $19.6 billion
- Net Income dropped by 2.4% to $2.3 billion
And yet... GAAP EPS rose by 2.6% to $2.36
How did this happen?
Simple: IBM's diluted shares outstanding plunged from 1041.8 billion to 992.3 billion in the past year due to a return in buybacks, as IBM repurchased $1.2 billion of its stock in Q1, after going on hiatus in Q4, and a total of $6.7 billion in the past year.
Why did IBM resume buybacks when several quarters ago it had no choice but to halt these once its debt was getting dangerously close to downgrade territory? The reason is that Net Debt declined substantially from $32.3 billion to $30.0 billion in the past quarter.
And how, one may ask, did IBM repay so much debt? Because a quick look at the current assets shows a $3.5 billion source of cash coming from short-term financing receivables which plunged from $19.8 billion to $16.3 billion, reducing total assets from $117.5 billion to $112 billion.
In other words, IBM is now in the aggressive collections business, just so it has the leeway to repurchase its own stock.
And finally, for good accounting gimmickry measure, IBM's effective tax rate dropped once again, from 20.5% to 19.5%, meaning its provision for income taxes tumbled 10.3%. This, as EPS rose if only on paper.
Taking all of the above together is why it took the algos to realize that earnings were quite a bit worse than the original kneejerk reaction higher suggested, and are now trading lower in the after hours.
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Get those Nazi's back in business!
Big blue sings the blues in the key of F.
You know what they say, as IBM GOES so goes the hookers
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
Indians Blowing Money.
IBM is dead they just haven't realized it yet.
And Microsoft is IBM 20 years ago.
If you see commercials for companies that talk about "business solutions" and other MBA buzzwords, you can just wait 10 years and they will be toast.
pods
One should never use a Windows Phone to call the suicide hotline, just get it over with already.
Always thought the BM stood for Bowel Movement
I prefer buzzwords for dumbasses.
Federal Reserve's cheap money means ever moar buybacks.
All you need is the CFO, board of directors, off-shore Indians for the software, Chinese for the hardware and loads of near 0% money for your own share repurchase.
Nirvana for CEOs.
This buyback manipulation nonsense is getting more than a little long-in-the-tooth. Maybe even CNBC will pick up on it soon...
don't hold your breath .... gross malinvestment never makes the news
They need to change the name from Big Blue to Big Red.
So, is IBM turning into a hedge-fund for it's own stocks, at least?
Revenue dropped 11.9%?
Bullz got their work cut out to explain
are you kidding....just issue debt and buy up all your stock. They will get to Zero reevenue and just issue debt.....wait that is the FED
We have been relegated to a bunch of superstitious witch doctors, looking at everything around us as sign, as a message from the gods of economics. There is no message other than we are being manipulated. They have us running from this statistic to another divergent graph to another story of corruption, all while they carry on. We cannot see everything they are doing, we can only see the results, and even then, only the results they want us to see. Ultimately we are powerless to do anything because WE have been indoctrinated as a society to put consumption and the love of something for nothing above all other things. Even now people are madly trying to figure out if they should buy gold or the fucking dip or bonds or anything, that once their prognostications have been fulfilled, they will be richly rewarded. Not from working really hard to create something useful, but to simply profit from another's loss, as that is what the market does.
We are not SMART when we go out and work. WE are the dupes, the stooges.
We are smart when we invest, when we place bets, when we bet that we are so smart we won't have to work so hard anymore...if at all.
We can all see the whole scheme is a fabrication largely designed as a Ponzi, yet so many still stay in. They think they know what few others do, that they can pick the winners and time the fall. And some will. Not the majority by a long shot, but just enough to give others hope, to place another bet.
The take away: BUY MOAR STAWKS!
buyback....Ha Ha.....more like.....fraud !!!!
Nobody wants US tech infrasructure since the Snowden revelations.
We fucked up and are doing really shitty.
Everything is awesome!
Ha. Anyone buying IBM since 2009 is a Nigtard by definition. Even then it was likely over-valued...
"Total revenues from continuing operations for the first quarter of 2015 of $19.6 billion were down 12 percent, flat year-to-year adjusting for currency and divested businesses, from the first quarter of 2014."
but but FOMC morons said King Dollar GOOD ...
Good thing IBM doesn't make typewriters, cash registers, or computers anymore!
And just think how bad it would be if they hadn't screwed over their retirees!
Stock buybacks, kickbacks, and parasitizing what is left!
Forewurd! Amurika!
Maybe they need to re-invent themselves. Maybe get into the wristwatch business?
Healthcare man, healthcare!
Imagine how efficiently they could deny coverage and overcharge in premiums, co-pays, deductilbles, and Medicare supplemental plans!
Hey, they already have experience with death panels.
Fire the ovens!
One day these cloud servers full of Tradebots, NSA text sweeps and dated interracial porn will be all your's Elroy...
are berong ta us!
IBM - It's Buyback Monday!
It's really across the industry. HP, Dell, Oracle, Cisco, EMC...etc, have had China, Russia, and the rest of the BRICS cut them off. That's what happens when you stop selling technology and become a tool of Uncle Sam's NSA arm. No Trust, no sale, no revenue.
They have it coming to them.
Spies often spend life behind bars or are executed.
These guys got off easy losing some business.
Must mean IBM is about to expand in Russia.....again
IBM Opens Finance Processing Center In Russia
Russia’s BCS Banking Group Selects IBM Commerce For Customer Analytics
The Finance Processing Center appears to be outsourced to take advantage of labor arbitrage. Cheap labor to undercut their European counterparts.They will be targeting transnational firms.
The BCS group selects IBM commerce: "BM Commerce to quickly and effectively conduct and execute personalized marketing campaigns for their banking clients."
- I always thought IBM sold computers, applications, and services. Looks like they also sell marketing campaigns. Who knew.
Only 2 quarters ago they were going to make $3.70 and during the current quarter $3.20 but they still beat. Hahahahahaha to funny. So a 22% haircut from 10-14 and a 9% haircut from 1-15 but they beat!!! People get paid for this, good money too. Hahahahahahahahahhah
IBM 5-year plan has ground much to cover. Reminds that goal of plan is grow earnings-per-share to $20 by 2015.
http://www.cringely.com/2012/04/18/not-your-fathers-ibm/
Seems IBM cognizance of current year lacks.
IBM should check in the basement for any vintage Tabulating/Collating Machines that they could sell to the USSA-sponsored Nazis in Ukraine.
The repeat punched-card biz alone should boost the bottom-line...
This is a super solid strong report in todays world. Just wait until they start losing money, that will be glorious, bonuses for everyone!
I have to give IBM credit. At least they are trying manage GAAP earnings, unlike the multi-billion dollar fraud foo foo adjusted EBITDA companies.
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May not be wise, even as a speculative gamble. Might I suggest lottery tickets or Ukrainian government bonds instead?
Funny how a REAL company like Netflix is sky high but IBM is plunging. It's the new world of Bubble Social Media Markets.
Oh man, this means tomorrow the stock market will make a bull run. Its kind of making my pants feel tight right about now. Boing!!
They've been buying up a good number of firms; but when they do, they try to glut the market (of the purchased firm) with neophytes and H-1Bs.
I signed up as a Software Vendor years ago. In my specialty, billing 100+/Hr was considered Normal. Once IBM bought it, I had a hard time being a Vendor(Subcontractor) to IBM. All I saw were H-1B Rates; and the funny part was - if it were in demand long enough, I'd get a call from a Tech recruiter (3-4 levels down the Food Chain) offering "real" Market Rates.
Imagine what the Pass through for the 1st Tier Subs would have been.
Naturally, the demand for the product went down as the newbies flooded and FUBAR'd the Product Offering. Back to the Drawing Board.