Today IBM reported that its sales were down yet again.
However, in the battle for positive reporting, Bloomberg reports IBM Earnings Beat Estimates as Currency Counters Sales Decline.
Curiously, when I click on that link, I see this headline: “IBM Earnings Show It’s Still Struggling With New Product Growth”
IBM reported quarterly earnings that beat analysts’ estimates, though a first-time breakdown of sales of newer offerings showed that growth in those areas still isn’t increasing fast enough to make up for a long decline in traditional products.
Adjusted earnings, excluding some items, fell 19 percent from a year earlier to $2.35 a share, International Business Machines Corp. said in a statement Monday. Analysts estimated $2.09 on average. Sales fell 4.6 percent, dropping for the 16th consecutive quarter, to $18.7 billion, compared with the average analyst estimate of $18.2 billion. Currency dragged on revenue by less than three percentage points, while the Armonk, New York-based company had previously forecast a three to four percentage point impact.
IBM received a tax refund in the first quarter of more than $1 billion, which Chief Financial Officer Martin Schroeter had said was already factored into the full-year earnings forecast of at least $13.50 a share.
The tax benefit will be fully absorbed by costs incurred due to job cuts.
Four Year Turn Around
The Wall Street Journal reports IBM Profit Falls as Revenue Declines Again.
Instead of changing the title as Bloomberg did, the Journal simply offered this subtitle: “Still, adjusted per-share profit rises above analysts’ expectations“.
International Business Machines Corp. ’s Virginia Rometty is still looking for a sales turnaround more than four years into her tenure as chief executive.
The Armonk, N.Y., company on Monday reported first-quarter revenue of $18.68 billion, down 4.6% as the company’s products have become increasingly under threat by the move to computing services delivered over the Internet. The company has now posted revenue declines for four years straight.
The computing giant said that net income fell 13.5% to $2.01 billion, or $2.09 a share. Excluding charges, profit was $2.35 a share. Analysts had expected adjusted earnings for the March 31-ended quarter, of $2.09 a share, according to a survey by Thomson Reuters. Revenue came in above Wall Street’s expectation of $18.29 billion.
Beat the Street Shills
It is extremely difficult to not “beat the street” because corporations guide analysts to targets the companies are sure they can beat.
Subtitles by the Wall Street Journal and headline changes by Bloomberg show both are willing shills in the “beat the street” scam.
Mike “Mish” Shedlock
Shareholders need to send Ginni Rometty packing. 4 YEARS of declining sales is absolutely horrendous performance and leadership.
Female CEO is an oxymoron. Ginni Rometty is following in the footsteps of Carly Fiorina, Meg Whitman, and Elizabeth Holmes.
You don’t get laid, do you?
We need truthful earnings and sales reporting, not the BS crap!
Who needs earnings, when you can just borrow at negative interest rates, buy back the stock, and shoo those pesky stockholders away.
They aren’t failing, they are simply resting up for their next big rally. What is it that makes everyone so pessimistic?
BTFD!
Embrace the horror that IS our casino economy.
By the time we figure out that we actually need to produce something to survive, it will be too late. Everyone is complaining about all of the freeloaders sucking from the teet of entitlements, but once you discount all of those sucking from the top side, skimming and profiting from “investment” strategies while desperately attempting to convince us of their economic necessity, we see how few really are holding this Ponzi up.
I’m still holding my Kodak and Polaroid stock for that big surge. It’s been coming on for 30 years now… man it’s gonna be a huge payday.
Earnings expectations are usually low-balled by the analysts. Why even pretend this charade is legitimate? Oh well, this bull market is becoming the second longest in history.
Contagious among the S&P 500
At the beginning of Q1 Factset had analysts estimate for earnings at +0.3% growth.
Currently?
“For Q1 2016, the blended earnings decline is -9.3%. If the index reports a decline in earnings for Q1, it will mark the first time the index has seen four consecutive quarters of year-over-year declines in earnings since Q4 2008 through Q3 2009”.
Q2 earnings growth – at the moment – (2.9%) … wonder, uh, how those estimates will fare??…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_4.15.16
Mish,
Do not take this as an insult because I really like your posts and thoughts. However, sometimes they make me want to cash out every dollar into gold and hide in the hills. But then I probably could not read your blog!
Have you got your eye on a good spot?
Yes, tell us where you will be with all that gold , we’ll call round some time to say ‘hello’ .
Buy bullets. In crisis, lead can be worth way more than gold or silver. With lead, you can get all the gold you want.
You forgot the gun . You need a gun too to go with the bullets , if you join the army they will give you one if you really want one.
Putting my hoarding skills to good use. It sure seems like silver bullets would be a good crossover investment. Dual use and still recoverable, if willing to dig for it.
Aren’t silver bullets for lawyers ?
But they’re coming from the hills … if you see the hills , run away !
(Black Adder)
That used to be an ad
“Head for the hills …. brothers coffee”
‘But then I probably could not read your blog’
You aren’t thinking Michael .
How did savages traditionally see in the dark when they wanted to read The Good Book before battling the fierce creatures that lurked and snarled at the entrance to the cave ?
That is right , they lit a candle . If they could read by candle light for several thousand years then certainly you should be able to see the screen of your computer with it .
You really should get one of those leaflets somewhere about how to eat beetles before you head out , and don’t forget to take a blanket and some warm clothes .
The last new IBM product was the chicklet keyboard.
IBM actually does serious, and very high value add work. A problem they have, is that the stupid easy money available to anyone with a better than 50% track record of being able to turn on a computer, puts a serious relative devaluation on doing old, solid technology work. So, instead of working for IBM doing solid work on systems that actually add real value day in day out, for a decent, $250K salary, everyone wants to work at a “startup” that is, like, the social network for, like people working at social networks….
There’s god work being done at startups as well, but with free money available in infinite sums for literally nothing, inane elevator pitching of simpletonian me-to idiocy is much more profitable than doing hard stuff. Just another prime example of malinvestment, IOW.
IBM could survive on cashflow if our idiocracy wised up and swapped paper for Gold. Most others could not. Which, unfortunately for both IBM and the future of American competitiveness, means exactly nada; as progressive dystopias are constitutionally incapable of dealing with failure by any other means than doubling down.
Technology seems just too easy to knock off, especially if you are China. The only tech bet is application stuff like FaceBook that can be IPOed. Something the gamblers can get behind. Like a business broker told me, the best companies to sell are ones with no real assets and only good will. Anyone who makes anything or even has employees of any amount holds liabilities that can fail or at the very least cost you money. Good will only pays and has very little holding costs. Nothing real or that produces anything has value. Only those things that cannot be defined or held in ones hand, things difficult to define,that are the basis for every bet in the markets, have real value.
The intangible, all you could ever imagine it to be, and more besides.
What makes IBM IBM is not so easy to replicate. Which is why they still do sell lots of, on the face of it, ridiculously expensive stuff that do seemingly mundane stuff.
The hard part of any data processing venture, aside from ones founded on fundamental advances in math, materials science and such which are rare, is dealing productively with complexity. Anyone can do “computer stuff” in the small, but once the scale gets up there, so do emergent problems that aren’t so easily dealt with by “two guys working in a garage for six months..” And this is where most of the real value add is at. Enabling customers outside the technology realm to confidently build business processes that would be too complex absent the technology.
So, even if a Chinese startup could knock off some hardware IBM builds, absent the experience and learnings that caused IBM to build it in the first place, it will just seem like an overengineered and expensive anachronism.
The “knockoff” problem has likely hurt IBM more by giving them cause to let IP and legal concerns become too central. Way back in the panic surrounding the growth of the Japanese “knockoffs” decades ago. Once senior level management in technology companies doing hard stuff, becomes entrenched with lawyers, finance people and others who are essentially nothing more than a bunch of clueless self promoters, the genuinely hard work gets down prioritized, in favor of simple to soundbite nonsense like “leveraging our IP portfolio.” And making sure whoever “invents” a slightly different way of attaching a key to a keyboard, spends the remainder of his professional career documenting how he did it for the patent lawyers.
Robert X Cringely’s coverage of IBM’s descent toward oblivion has been spot on. Nothing else to bother with if you keep up with his coverage.
In a world where stocks of blue chips become the new safe haven, as the govt bond bubble pops, fundies are the tool of fools.
IBM has been in a relative strength trading range since the tech bubble popped, but they are still above their 2007 high, which is a testimate to how global capital views the rest of the world. If you think the justifications are silly now, just wait until the sovereign defaults get into full swing by 2017 and stocks become the only safe have market that’s big enough to absorb the flows. Nothing is as it appears because no one has seen what is about to occur.