IBM Reports Its Results on Monday. Tech Earnings Season Is Starting.

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The IBM logo is shown successful the Garibaldi-Porta Nuova territory of Milan.

MIGUEL MEDINA/AFP via Getty Images

The midyear tech net play kicks disconnected Monday day with results for the June 4th from IBM.

The statement presumption connected Wall Street is that IBM (ticker: IBM) volition study gross of $18.3 billion, up astir 3% from a twelvemonth ago, with profits of $2.29 a share. Like galore different tech companies this quarter, Big Blue’s results volition payment from comparisons with a debased base. Revenues fell 5.4% successful the year-ago 4th arsenic U.S. gross home merchandise fell 34%.

Expectations for the September 4th are that gross volition beryllium $17.6 billion, with profits of $2.59 a share. 

IBM’s concern should payment from a pickup successful endeavor spending connected hardware, software, and services. The probe steadfast Gartner this week projected 2021 information-technology spending volition leap 8.6%, a crisp betterment from the 0.9% summation successful 2020.

Meanwhile, the Street awaits the fiscal details of the company’s pending spinoff of its managed accusation services business, present called Kyndyl. The institution has said it expects to implicit the transaction earlier year-end. 

In a probe enactment previewing the June quarter  results, Morgan Stanley expert Katy Huberty wrote that she expects results for the 4th to beryllium successful enactment with Street estimates. She is upbeat connected CEO Arvind Krishina’s strategy to absorption connected sustainable growth, saying the banal is positioned for amended show successful 2022.

A recent interior email outage astatine the institution isn’t apt to materially impact results, Huberty said. She besides sees a bigger-than-forecast payment from overseas speech factors. She said she expects a 5.1% currency-related boost to revenues, supra the 3% absorption has told investors to expect.

Next year, Huberty said, IBM volition beryllium entering a caller mainframe cycle, and observes that “stocks historically statesman to outperform aft rotation transactions.” She besides noted that organization ownership successful IBM remains astatine all-time lows.

Huberty kept an Equal Weight standing connected the banal with a people of $152 for the price.

Evercore ISI expert Amit Daryanani likewise expects results to beryllium successful enactment with expectation. He said the biggest absorption connected the post-earnings telephone volition beryllium a caller flurry of absorption changes astatine the company, including the exit of President Jim Whitehurst. He told Barron’s in a caller interview that helium wants to find a CEO role. 

As for the quarter, Daryanani noted that different endeavor IT vendors person been reporting beardown results, pointing to the latest numbers from some Oracle and Accenture. The postpandemic betterment should boost request from markets similar retail and travel, helium said, noting that occupation postings astatine IBM saw a ample uptick successful May connected some a year-over-year and sequential basis.

Daryanani kept an In Line standing connected the banal with a people terms of $150.

On Friday, IBM shares were disconnected astir 0.8%, to $139.38. The banal is up 15% twelvemonth to date.

Write to Eric J. Savitz astatine eric.savitz@barrons.com

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