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IBM Misses Top Line, Boosts EPS Forecast, Stock Slides After Hours

Tyler Durden's picture




 

Putting the cherry on top of an ugly day for bulls comes global tech vanguard IBM, which did not use the DVA wildcard and still saw its earnings beat already reduced expectations of $3.22, printing at $3.28... but... it did miss the consensus top line of $26.34 billion by just under $200 milllion, at $26.16 billion. Since this the first time in probably forever that Big Blue has not beat the top line, the stock is certainly not too happy after hours. That this is happening despite the company's boost to its EPS forecast is quite troubling.

Earnings summary:

  • Q3 Revenue USD 26.16bln vs. Exp. USD 26.34bln
  • Q3 Operating margin 46.8% vs. Exp. 46.24%
  • Q3 Services backlog of USD 137bln, up USD 2.4bln
  • Q3 Software revenue USD 5.8bln, up 13%
  • Q3 Americas revenue USD 10.9bln
  • Sees year adjusted EPS at least USD 13.35, saw USD 13.25 vs. exp. USD 13.33

Also notable is that total ST and LT debt increased by $1.5 billion from $28.5 billion at December 31, to $30 billion at the end of Q3: at least someone is benefitting from relevarging at all time low yields.

From the release:

"In the third quarter, we drove revenue growth, margin expansion and increased earnings as a result of our innovation-based strategy and continued investment in growth initiatives," said Samuel J. Palmisano, IBM chairman, president and chief executive officer. “Growth markets delivered outstanding revenue performance across software, hardware, and services and contributed to the company's expanded margins. We also achieved strong results in Smarter Planet, business analytics and cloud.

"Based on this performance, we are raising our 2011 full-year operating earnings per share expectations to at least $13.35."

Full-Year 2011 Expectations

IBM raised its expectations for full-year 2011 GAAP diluted earnings per share to at least $12.95 from at least $12.87; and operating (non-GAAP) diluted earnings per share to at least $13.35 from at least $13.25. The 2011 operating (non-GAAP) earnings exclude $0.40 per share of charges for amortization of purchased intangible assets, other acquisition-related charges, and retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.

 

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Mon, 10/17/2011 - 16:23 | 1782740 HedgeAccordingly
HedgeAccordingly's picture

Batter up .. apple 

Mon, 10/17/2011 - 16:31 | 1782779 Divided States ...
Divided States of America's picture

Same ol crap...higher EPS on lower outstanding share count AND lower corporate tax rates....

Mon, 10/17/2011 - 16:46 | 1782829 derek_vineyard
derek_vineyard's picture

where's robo now?

Mon, 10/17/2011 - 16:50 | 1782845 LawsofPhysics
LawsofPhysics's picture

clearly the internet is to blame.  hammy and robo are working on it, please stand by...

Mon, 10/17/2011 - 16:54 | 1782862 derek_vineyard
derek_vineyard's picture

does robo have voo doo dolls of tyler durden?

Mon, 10/17/2011 - 16:23 | 1782741 RacerX
RacerX's picture

couldn't happen to a nicer co. schmucks..

Mon, 10/17/2011 - 16:34 | 1782793 kito
kito's picture

are you just anti corporation for the sake of being anti corporation? exactly what problems do you have with ibm. they actually PRODUCE things that are beneficial to society. do you know they are the leaders in merging nano technoogy and pharma--nanomedicine?

http://www.zdnet.co.uk/news/emerging-tech/2011/04/04/ibm-nanomedicine-breakthrough-to-aid-antibiotics-40092371/

Mon, 10/17/2011 - 16:53 | 1782857 Raynja
Raynja's picture

they actually PRODUCE things that are beneficial to society.

Please don't tell me you are referring to watson. At best the ai eliminates service sector jobs, at worst it... well you know about skynet.

Mon, 10/17/2011 - 17:08 | 1782942 RacerX
RacerX's picture

yeah they produce things.. like outsourcing jobs to "low cost countries".

thanks IBM.

Mon, 10/17/2011 - 17:35 | 1783073 kito
kito's picture

You know very little of the company.

Mon, 10/17/2011 - 18:35 | 1783304 RacerX
RacerX's picture

or, maybe you don't.

Mon, 10/17/2011 - 21:40 | 1783799 Tijuana Donkey Show
Tijuana Donkey Show's picture

Let me tell you a story of how IBM Global Services helps corporate America screw all of the IT sector out of jobs. (HP does this trick too, but not as well.) IBM to big company, "Hey, outsource your IT to us!" Big Company, "OK, let's do this."  IBM then "aquires" all the tech staff, slashes pay, benefits, and has you train someone in another country to do your job, so you can get a severace package on your way out. Then, complain that there are no qualified workers in the US of A for some reason, and bring in underpaid slaves on H1-B visas, while hiding profits off-shore. Wrap in helping the US GOVT spy on every american on the Internet, and a splash of patent blackmail to any company coming up the ranks. Kito, I respect your posts and views, but IBM is sucking the life out of america. Also, they made Lotus Notes, which the UN should bring them up on war crime charges for.

Thu, 10/20/2011 - 01:26 | 1791653 rexzy
rexzy's picture

IBM=Indian Business Machine

Mon, 10/17/2011 - 16:23 | 1782742 TooBearish
TooBearish's picture

Big Blue Shoots...Bitchez

Mon, 10/17/2011 - 16:38 | 1782803 Money 4 Nothing
Money 4 Nothing's picture

Damn bloggers! Their ruining everything! Sarc /

Mon, 10/17/2011 - 16:25 | 1782749 trampstamp
trampstamp's picture

nice short today boys!

Mon, 10/17/2011 - 16:27 | 1782759 Zymurguy
Zymurguy's picture

Where's the volume today bitchez?

Mon, 10/17/2011 - 16:27 | 1782760 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Can this thing still play chess though?

Mon, 10/17/2011 - 16:29 | 1782767 Gubbmint Cheese
Gubbmint Cheese's picture

does anyone have a schedule of what the EPS expectations were on IBM over the last 90, 60, 30, and 7 days? Saw this for Alcoa and they reduced AA's eEPS by 30%..

just curious if they did the same here.

 

Mon, 10/17/2011 - 16:31 | 1782774 MiningJunkie
MiningJunkie's picture

Light volume pullback so all one needs do is BTFD and get ready for the biggest performance chase/race in 25 years...volatility until end of month then blast-off. Short this rally in cash...

Mon, 10/17/2011 - 16:35 | 1782797 jdelano
jdelano's picture

hahahahahahahahahahahahahahahahaha.  phew.  thanks.

Mon, 10/17/2011 - 16:56 | 1782876 jcaz
jcaz's picture

Wow, you just saved the market......... BUWAHAHAHAHHAAHAHH!!!!!!!!!!!!!

Mon, 10/17/2011 - 16:34 | 1782784 Saxxon
Saxxon's picture

AAPL is the canary in the coal mine.  I was disappointed the market chose to sell today.  I was hoping it would tread water today and tomorrow then shoot up into the close before AAPL earns.

if AAPL disappoints or maybe just fails to dazzle, look out below .

Mon, 10/17/2011 - 16:48 | 1782840 d00daa
d00daa's picture

look what they are doing to IBM, AAPL needs to beat huge or it's down down down...  the bear is hungry.

Mon, 10/17/2011 - 17:39 | 1783090 RiverRoad
RiverRoad's picture

Re AAPL:    And the fat lady will sing my friends.  Yes sirree bob she will sing before this mess is over.

Mon, 10/17/2011 - 17:01 | 1782909 junkyardjack
junkyardjack's picture

AAPL will beat just like GOOG did.

Mon, 10/17/2011 - 16:33 | 1782791 Manthong
Manthong's picture

Well, you've always got CRM to pick up the slack in the business services sector.

Mon, 10/17/2011 - 16:35 | 1782795 RobotTrader
RobotTrader's picture

Gap down tomorrow morning.

Another gap down Wednesday morning if AAPL misses.

CROX imploding 32% after trading halt.

 

Mon, 10/17/2011 - 16:46 | 1782828 ss123
ss123's picture

Try taking the derivative of that Crox graph AH. Nasty.

Mon, 10/17/2011 - 16:54 | 1782863 slewie the pi-rat
slewie the pi-rat's picture

everything is priced in but the truth

stay tooned to the blog<0>sphere 4 updates and impending regulatory measures

 

Mon, 10/17/2011 - 16:36 | 1782801 buzzsaw99
buzzsaw99's picture

IBM sitting at all time highs. crAAPL too.

Mon, 10/17/2011 - 18:15 | 1783221 andybev01
andybev01's picture

Someone needs to invent an iPad cover made out of Crocs material...

Mon, 10/17/2011 - 16:40 | 1782807 max2205
max2205's picture

I am shocked. Usually IBM gets a purchase order from the Govt to cover any rev gaps. Somebody's gonna pay for this one.

Mon, 10/17/2011 - 16:44 | 1782825 d00daa
d00daa's picture

guidance is raised and it's still down 3.5% ah??

lmfao, no this isn't a bear market.  not at all.  /s

Mon, 10/17/2011 - 16:49 | 1782842 vegas
vegas's picture

WTF, operating margins of over 45%? And OWS pines for the heads of bankers on Wall Street?

If anybody is getting screwed, first in line after customers of BofA, are the saps who use IBM's services.

Mon, 10/17/2011 - 16:57 | 1782878 B-rock
B-rock's picture

Would someone tell my why there are $8.00 candles during this after-hours price action.... 6 big spikes that go back to the previous level... on the 1min TOS chart... ??

Mon, 10/17/2011 - 17:11 | 1782960 reader2010
reader2010's picture

Anyone still BFTD?

Mon, 10/17/2011 - 17:48 | 1783124 slaughterer
slaughterer's picture

This is not a bear market.  This is a slaughterer market.  One slip up, and your company equity dives 33% in 2.3 seconds. 

**

AAPL will be alright, if they post EPS of $10 or more.  HA HA HA HA.

Mon, 10/17/2011 - 18:03 | 1783180 Hephasteus
Hephasteus's picture

I was at the intangible GAP store the other day buying some firesale Next Big Idea intellectual property and I saw IBM there. Hair unwashed. Blue suit had crusty flakes all over it. It looked like they had been pullig all nighters trying to radiation harden chips before fukishima destroys everything they ever built that's not in space.

Mon, 10/17/2011 - 18:42 | 1783332 piaoyou
piaoyou's picture

You forgot IBM $8 Billion stock repurchase program. So, it actually missed the earnings too without this.

Mon, 10/17/2011 - 20:12 | 1783597 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Boo Hoo IBM!  Maybe they can raise from the dead their associates from the Third Reich to rescue them!?

http://news.cnet.com/2009-1082-269157.html

Mon, 10/17/2011 - 21:27 | 1783772 friendly manitoba
friendly manitoba's picture

deja vu all over again  - cant remember if it was the  1987 " correction " - but it was BIG BLUE missing earnings and tanking that was the black swan that started the poop hitting the fan ... its off abt 4% or $8  in after hours .... 

 

if i wasnt Canadian i would vote for Kyle Bass for President  btw  - very impressive dude 

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