I.B.M. tops Wall Street's profit forecast; but some ask if shares have outrun prospects

Article Abstract:

IBM's 4th qtr 1996 earnings announced Jan 21, 1997, are higher than anticipated. These earnings have increased $3.98 per share as compared with $3.09 per share during the same period in 1995. IBM's revenue has also risen to $23.1 billion, an increase of 5.6%. While IBM's reported profits have exceeded the average share increase of $3.88 predicted by analysts, many investors and analysts had forecasted IBM to earn over $4 per share. Merrill Lynch's Daniel Mandresh, for example, maintains that IBM's results are disappointing in light of Merrill Lynch's earnings estimate of $4.32 a share. Mandresh, along with other analysts, fear that IBM stock will lose momentum as a result of the earnings report. In anticipation of a strong announcement from IBM, however, shares are reported to have increased $1, closing at a 52-week high of $168. IBM's shares have come close to reaching their Aug 1987 all-time high of $175.875, and its service unit continues to generate the most revenue by reporting an increase of 22%.

Company Sales/Revenue

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I.B.M. and Compaq report weak earnings

Article Abstract:

IBM and Compaq suffered weak 3rd qtrs in 1995, but their stocks rose anyway in a strong technology market. IBM took a $1.8 billion charge for the Lotus acquisition, after which the company had a $538 million net loss. Without the charge, 3rd qtr 1995 earnings reached $1.3 billion, compared to 3rd qtr 1994 earnings of $710 million. The company's stock rose $2.875 to $96.875, compared to the $114.625 it reached in Aug 1995. IBM's figures reflect weak hardware sales, as shortages of power supply units and an anticipated AS/400 upgrade slow sales. The stock performance reflects analysts' conclusions that CFO G. Richard Thoman will continue cost cutting. Compaq's net income increased 21.9% to $245 million, compared to the $210 million it made in 3rd qtr 1994. Compaq suffered from slow European sales, where the company has higher profit margins, and delays in getting a new laptop to market. The company anticipates strong fourth quarter earnings.

Compaq Computer Corp., CPQ, Company sales/revenue, Company losses

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I.B.M. surpasses forecasts but it drops by 25 cents a share

Article Abstract:

IBM reports earnings that doubled from the previous year's quarter and surpassed the most optimistic expectations of Wall Street financial analysts. The stock value of IBM dropped 25 cents to $107 per share after the announcement. The company had earnings of $1.72 billion or $2.97 per share compared with $689 million or $1.14 in the previous year. IBM has already matched its 1994 annual profit in the first half of 1995 and returned to profitability in 1994 after three straight annual losses. The company had improvements in almost every sector of its business with service revenues making the largest gain and hardware and workstation sales increasing significantly. Mainframe computing sales stayed relatively strong and IBM officials predicted that mainframe system sales would stay flat rather than continue their long-term decline in sales.

Computers

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