International Business Machines Corporation
IBM
is slated to report first-quarter 2021 results on Apr 19, 2021.
The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.67 per share, which indicates a decline of 9.2% from the prior-year quarter’s levels.
For quarterly sales, the consensus mark is at $17.44 billion that suggests a decline of 0.7% from the year-ago quarter’s reported figure.
International Business Machines Corporation Price and EPS Surprise
International Business Machines Corporation price-eps-surprise
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International Business Machines Corporation Quote
Notably, the company has a trailing four-quarter earnings surprise of 5.68%, on average.
Factors to Note
IBM’s first-quarter performance is likely to benefit from healthy uptake of its hybrid cloud computing platform, cognitive technologies, mobile, analytics and AI-related solutions.
Synergies from the Red Hat acquisition particularly might have contributed to the cloud segment’s revenues in the to-be-reported quarter. Markedly, Red Hat revenues in the fourth quarter of 2020 increased 19% (up 17% at constant currency) on a normalized basis. More than 2,800 clients including the likes of Barclays and Walmart are using Red Hat and IBM’s hybrid cloud platform, presently.
Further, digital transformation wave has
boosted
the adoption of cloud-based QRadar, and Identity and Trust services, and CloudPak for Security offerings, which is expected to have contributed to the top line growth for IBM in the about to be reported quarter. Gains from healthy adoption of IBM z15 are likely to have acted as a tailwind.
Moreover, IBM has been endeavoring to improve efficacy of its quantum computing systems as well as services and blockchain offerings. In this respect, increasing IBM Q Network customer base remains a positive.
However, pandemic-induced restricted economic activity and decline in worldwide IT spending may have hindered business prospects in the first quarter for IBM, which carries a Zacks Rank #3 (Hold).
You can see
the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Also, escalating expenses directed toward cloud platform development amid intense competition in the cloud space from the likes of
Amazon
’s
AMZN
Amazon Web Services,
Microsoft
’s
MSFT
Azure platform and
Alphabet
’s
GOOGL
Google Cloud might have dented the company’s profitability in the quarter to be reported.
Key Developments in Q1
During the first quarter, IBM acquired 7Summits for an undisclosed amount. 7Summits’ buyout will aid IBM to strengthen its portfolio of Salesforce services and foster digital transformation for Salesforce customers.
In March 2021, IBM
launched
IBM Cloud Multizone Region (MZR) in Brazil, marking its first MZR in Latin America. The launch of MZR in Brazil will help business enterprises safely deploy mission-critical applications and workloads and assist in addressing data sovereignty requirements, noted IBM.
IBM revealed that its new company, which will be formed after spin-off of its Managed Infrastructure Services business, will be named as Kyndryl, and will be helmed by Martin Schroeter as a CEO. The spin-off is an attempt to facilitate digital transformation of clients and is a testament to IBM’s efforts to accelerate its hybrid cloud growth strategy.
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