Categories Analysis, Earnings, Technology

IBM to report Q4 earnings on Jan 22. What to expect

International Business Machines (IBM) is scheduled to report fourth-quarter results on Tuesday, January 22. Analysts expect the company to report earnings of $4.84 per share on revenues of $21.76 billion.

Investors continue to pin their hopes on the company’s emerging technologies, dubbed “strategic imperatives,” which include its cybersecurity, analytics and cloud operations. At the end of the 12-month period ending the last reported quarter, strategic imperatives revenues jumped 13% year-over-year to $39.5 billion and accounted for almost 49% of its total revenue.

Investors will be hoping that the unit surpasses the half-way mark during the to-be-reported quarter. On a positive note, IBM is well-positioned to achieve its target of $40 billion in revenues from strategic imperatives at the end of 2018.

Also read: IBM Q4 2018 earnings results

Some analysts believe IBM will take another year to overcome its sluggish performance trajectory as the growth provided by strategic imperatives will mostly be offset by forex headwinds.

During the third quarter, currency fluctuations played spoilsport on Big Blue’s top line, which declined 2% and missed estimates. Yet, the company has stubbornly held on its full-year outlook of revenue increase and adjusted earnings of $13.80 per share.  If the company pulls this off, it would award enough short-term investor confidence.

IBM is also seriously considering getting more invested in hybrid cloud business, which holds a lot of growth prospects in 2019. This is evident from IBM’s recent purchase of Red Hat for $190 a share, and at a 63% premium to Red Hat’s then closing price.

Red Hat shareholders give green signal for acquisition by IBM

The company is also jettisoning some of its software products for $1.8 billion, which will be absorbed by India-based HCL, to keep its debt obligations under check.

Slow transition of the company from legacy businesses to new fields of operations have already taken a toll on IBM. With no real end to the currency headwinds in sight, the transition phase is likely to continue for one more year. But for that, IBM first needs to instill investor confidence through its Q4 results.

 

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