The technology company has seen a declining stock price, but yet to see how it performs in year 2016.
In 2015, International Business Machines Corporation stock has dropped by as much as 14%; it underperformed the S&P 500 Index. In the past couple of years, the technology company has seen a drastic decline in its hardware-manufacturing sector due to which it was forced to enter the analytics, cloud and security sectors.
On January 19, the technology company was supposed to report its financial results for the fourth quarter of fiscal year 2015. The Street predicted on what report is expected by the company. For the quarter, The Street believed that IBM might be posting revenues of as much as $22 billion, which indicates a decline of 9% on a year-over-year basis. While it stated that the earnings per share – EPS – is predicted to be around $4.81, which indicates a decline of 17% on year-over-year basis. Free cash flow is likely to be at $5.1 billion and 53.7% as the gross margin.
IBM has always focused to keep its major investments towards improving its bottom line due to which it has mostly not lived up to The Street’s expectation of the revenue generation, but it has always outperformed the EPS estimates. For the past consecutive nine quarters, business managed to outperform the revenue estimation only once; while on the other hand, earnings estimates have been outperform by the company for at least seven times.
In the previous quarter of the current fiscal year, it had reported decreasing earnings in more of its segments while only the cloud, analytics, and security sectors performed comparatively well. In the third quarter, revenue of $19.28 billion was reported while the estimation of the analysts at The Street was $19.64 billion. Additionally, the EPS predicted by The Street for the third quarter was $3.30 and the company reported $3.34.
Ever since the business dropped its EPS guidance for 2015, IBM stock has declined by as much as 6%. During December past year, the tech organization kept going with its acquisitions in order to target its “stronger go to market and sales commitment” the strategic partnership was expanded with Box. Apart from being on an acquisition spree, it has also decided to lay off a number of its employees. In Germany, as many as 3,000 workers at IBM could lose their jobs are equal to 18%of its total workforce.
Analysts are predicting that investors are likely to focus on the company’s software sector in the year 2016 along with aiming at a stable free cash flow.
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