IBM's earnings climbed sharply in first quarter; profit more than tripled as revenue rose 18%; news spurs stock price

Article Abstract:

IBM 1st qtr 1995 earnings rose 18% over the same quarter 1994 on strong sales improvements in mainframes, PCs and software, but company officials warn that the computer giant has more changes in the pipeline. The strong numbers are a record for 1st qtr results, and sales improved in all product lines. For the quarter, IBM's earnings rose to $1.29 billion, $2.12 per share, compared to $392 million, $0.64 per share, in the 1st qtr 1994. The company's revenues improved to $15.7 billion from $13.4 billion in 1994. IBM reports that the strong dollar was responsible for about 33% of the revenue increase because IBM's products are cheaper to sell overseas. The company also warned that the combination of a slowing US economy and IBM's own restructuring made it unlikely that these strong numbers would continue for the rest of the year. IBM's PC and disk drive divisions were responsible for about 20% of its total profit increase.

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IBM earnings rise 18% to beat estimates; revenue gain fails to meet analysts' expectations; gross profit margin falls

Article Abstract:

IBM's 4th qtr 1996 earnings have exceeded most forecasts by rising 18%. Despite this increase in net income, however, IBM's revenue growth did not meet analysts' predictions, and its gross profit margin decreased from the same quarter in 1995. IBM's stock is reported to have reached $168 prior to the company's announcement on Jan 21, 1997. IBM is mainly attributing its $2.02 billion earnings to the success of its thriving computer-services unit. The computer-services unit has maintained consistent growth and is reporting a $5 billion revenue increase. IBM's revenue has grown from $21.92 billion to $23.14 billion. While the increase of 5.6% to earnings of $3.09 per share is higher than the $3.88 per share quarterly projection determined by a survey of 16 analysts, the results are disappointing to many insiders who had predicted more aggressive earnings.

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IBM's method of accounting for cutbacks bucks trend of taking repeated charges

Article Abstract:

IBM plans to include the costs associated with down-sizing as part of its normal cost of business and not take them as charge-offs, a move that is contrary to accepted practice. In 1996, IBM will lower its reported earnings by up to $800 million dollars to cover the cost of reducing real-estate and jobs, but it will not declare the loss as a one-time charge. From 1992 to 1995, IBM took $21.5 billion in one-time charges. The company will continue to reduce jobs and its real-estate holdings, and it will explicitly indicate these costs in its financial reports. IBM's decision may affect the price of its stock, since analysts use reported earnings to judge a company's later performance. When restructuring costs are seen as a one-time event instead of as part of the cost of doing business, the company's later earnings seem comparatively larger.

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