IBM reports earnings in two weeks, and the number that mainly concerns me is their revenue number. IBM has shown decelerating revenue the past two reports. This is a trend that needs to be reversed or the stock will take a big hit. The CFO claimed at the last report that contracts from the 3rd quarter were to be pushed back into the 4th quarter. If this is true, then IBM should be in great shape. If not...
Typically this is the strongest of all quarters as contracts and the majority of the business is closed during this quarter. I have IBM clients who keep emphasizing they have had a very busy quarter. That is vague as I realize the words themselves. If the CFO's comments translate to 4th qtr contracts, we should be in great shape if revenues are back to where we need them to be. I think a 200 handle should be achieved after closing even approaching the 202 203 mark. I feel this stock although it is considered a growth trades a little better than that but not quite to what a value stock would trade it. I feel strongly that the quarter will be another January hit and we should fly to and past 200.
Revenue is the issue. I heard Cramer respond to a question about IBM revenue last night and the reply wasn't reassuring -- the question from the guy calling in was pretty long and Cramer just said if it went to $180 he would buy more for his charitable trust. So it sounds like he is concerned about the tings that will hurt big tech revenue -- weak economies in Europe & Asia and a strengthening dollar. We will see soon!
If IBM drops to $180 then I would not be a buyer. IBM is expected to earn $5.25, and I am sure they will meet/beat that number. However, if the revenue numbers continue to trend in reverse the stock will sell off. I would say the CFO has some integrity at stake with this report based on his statements on the last conference call. Are some of the smaller firms taking market share from IBM? Is the "big data pie" not as big as first thought? ORCL, SAP, and ACN seem to be doing well. I expect the same from IBM.