Sterne Agee Analyst Shaw Wu says he expects IBM to show gains in software and server revenue for the first quarter of 2012. IBM reports its Q1 2012 earnings on April 17.
For the first quarter
of 2012, IBM is expected to show gains in software and high-end
servers, according to a forecast by an industry analyst.
IBM will report its Q1 2012
financial results on April 17. In an April 16 note to investors, Shaw Wu, an
analyst with the investment firm Sterne Agee, said he expects that IBM will
show decent quarterly results driven by software and share gains.
Based on our supply chain
checks, we anticipate in-line revenue and a beat on EPS [earnings per share],
driven by software and share gains in high-end servers offset by mixed trends
in services, Wu said. For its outlook, we anticipate the company to modestly
raise its previous view of at least $14.85 in EPS for 2012. IBM remains
one of our top picks.
Wu said for the first
quarter of 2012, Sterne Agee is modeling $24.8 billion in revenue and
$2.68 in earnings per share for IBM, versus the consensus at $24.8 billion and
$2.65 in EPS.
What we are picking up in
our channel feedback is in-line to above-performance in its software business [23%
of revenue], driven by its business analytics, enterprise cloud and
Smarter Planet initiatives, Wu said. We believe this richer mix of
software should allow the company to post an EPS upside.
Moreover, Wu said Sterne
Agee expects IBM to show share gains in high-end servers driven by its
Power multicore processors that allow customers to consolidate lower-end
and midrange servers and increase efficiencies.
However, Wu said in his
report, In services, we believe revenue growth could be a little more
challenged, offset by a focus on profitability, given mixed data points
from INFY [Infosys] and ACN [Accenture]. As such, we anticipate overall
revenue to be about in-line. Last but not least, from a geographic perspective,
we are picking up relative strength in the Americas (42%) and Asia-Pacific
(23%), offset by mixed trends in Europe (32%).
Meanwhile, Wu said Sterne
Agee maintains its buy rating for IBM, as Big Blue is arguably the
model company in the enterprise space others are trying to emulate. We
believe the companys pioneering vision that the value-added in IT is
software and services has given it strategic and structural advantages.