We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Lower Software Revenues Dent IBM's Earnings in Q1?
Read MoreHide Full Article
International Business Machines Corporation (IBM - Free Report) is scheduled to report first-quarter 2023 results on Apr 19, after the closing bell. In the to-be-reported quarter, the company is likely to have recorded lower revenues from the Software segment due to the challenging macroeconomic environment, resulting in conservative expenditures by firms.
Factors at Play
The Software segment includes Hybrid Platform & Solutions comprising software services, Red Hat, automation and data & AI businesses and Transaction Processing.
During the first quarter, IBM collaborated with Wasabi Technologies to drive data innovation across hybrid cloud environments. The partnership with this cloud storage firm will enable business enterprises to run applications across any environment – whether in the cloud or at the edge – and help users to cost-efficiently access and utilize key business data and analytics in real time. These are likely to have generated incremental revenues in the Software segment.
IBM also collaborated with Cohesity to launch a new IBM Storage Defender solution that will help address the critical need for data security and resiliency in hybrid cloud environments. Combining data protection, cyber resilience and data management capabilities from both companies, Cohesity's data protection is an integral part of IBM Storage Defender. Leveraging AI across multiple storage platforms, it helps protect organizations' data layer from risks like ransomware, human error and sabotage with automated recovery functions to help companies restore business-critical data in hours.
During the first quarter, IBM expanded its Client Innovation Center by launching its second Japan Innovation Hub in Cebu City, Philippines. The new hub will be manned by a Filipino workforce with specialized skillsets in data analytics, AI, hybrid cloud transformation, application management, supply chain, finance and procurement. Leveraging AI, ML and automation techniques, it combines human expertise and advanced technologies for faster response, efficiency and transparency through a holistic approach to secure hybrid cloud environments. These initiatives are likely to be reflected in the upcoming segment results.
However, a challenging macroeconomic environment, inflationary pressures and business uncertainty are forcing various firms to have a conservative approach to earmark funds for digital transformation and cloud adoption. This is likely to have led to top-line contraction in the segment.
Key Developments in Q1
During first-quarter 2023, IBM inked an agreement to acquire StepZen Inc. The buyout of this U.S.-based firm that develops GraphQL server with a unique architecture to help build GraphQL APIs quickly and with less code will complement IBM's existing strengths in this domain.
IBM also acquired NS1, a leading provider of network automation SaaS solutions to enable businesses to deliver content, services and applications with optimal performance, reliability, security and cost. The acquisition is likely to have strengthened its hybrid cloud and AI capabilities.
Overall Expectations
The Zacks Consensus Estimate for revenues from Software is pegged at $5,699 million compared with $5,772 million reported in the year-ago quarter.
The Zacks Consensus Estimate for total revenues for the company stands at $14,274 million. It generated revenues of $14,197 million in the prior-year quarter. The consensus mark for earnings is currently pegged at $1.27 per share, indicating a decline from $1.40 in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for IBM this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $1.27. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
International Business Machines Corporation Price and EPS Surprise
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for Corning Incorporated (GLW - Free Report) is +3.71% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Apr 25.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +8.00% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Apr 26.
Image: Bigstock
Will Lower Software Revenues Dent IBM's Earnings in Q1?
International Business Machines Corporation (IBM - Free Report) is scheduled to report first-quarter 2023 results on Apr 19, after the closing bell. In the to-be-reported quarter, the company is likely to have recorded lower revenues from the Software segment due to the challenging macroeconomic environment, resulting in conservative expenditures by firms.
Factors at Play
The Software segment includes Hybrid Platform & Solutions comprising software services, Red Hat, automation and data & AI businesses and Transaction Processing.
During the first quarter, IBM collaborated with Wasabi Technologies to drive data innovation across hybrid cloud environments. The partnership with this cloud storage firm will enable business enterprises to run applications across any environment – whether in the cloud or at the edge – and help users to cost-efficiently access and utilize key business data and analytics in real time. These are likely to have generated incremental revenues in the Software segment.
IBM also collaborated with Cohesity to launch a new IBM Storage Defender solution that will help address the critical need for data security and resiliency in hybrid cloud environments. Combining data protection, cyber resilience and data management capabilities from both companies, Cohesity's data protection is an integral part of IBM Storage Defender. Leveraging AI across multiple storage platforms, it helps protect organizations' data layer from risks like ransomware, human error and sabotage with automated recovery functions to help companies restore business-critical data in hours.
During the first quarter, IBM expanded its Client Innovation Center by launching its second Japan Innovation Hub in Cebu City, Philippines. The new hub will be manned by a Filipino workforce with specialized skillsets in data analytics, AI, hybrid cloud transformation, application management, supply chain, finance and procurement. Leveraging AI, ML and automation techniques, it combines human expertise and advanced technologies for faster response, efficiency and transparency through a holistic approach to secure hybrid cloud environments. These initiatives are likely to be reflected in the upcoming segment results.
However, a challenging macroeconomic environment, inflationary pressures and business uncertainty are forcing various firms to have a conservative approach to earmark funds for digital transformation and cloud adoption. This is likely to have led to top-line contraction in the segment.
Key Developments in Q1
During first-quarter 2023, IBM inked an agreement to acquire StepZen Inc. The buyout of this U.S.-based firm that develops GraphQL server with a unique architecture to help build GraphQL APIs quickly and with less code will complement IBM's existing strengths in this domain.
IBM also acquired NS1, a leading provider of network automation SaaS solutions to enable businesses to deliver content, services and applications with optimal performance, reliability, security and cost. The acquisition is likely to have strengthened its hybrid cloud and AI capabilities.
Overall Expectations
The Zacks Consensus Estimate for revenues from Software is pegged at $5,699 million compared with $5,772 million reported in the year-ago quarter.
The Zacks Consensus Estimate for total revenues for the company stands at $14,274 million. It generated revenues of $14,197 million in the prior-year quarter. The consensus mark for earnings is currently pegged at $1.27 per share, indicating a decline from $1.40 in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for IBM this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $1.27. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
International Business Machines Corporation Price and EPS Surprise
International Business Machines Corporation price-eps-surprise | International Business Machines Corporation Quote
Zacks Rank: IBM currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Verizon Communications Inc. (VZ - Free Report) is set to release quarterly numbers on Apr 25. It has an Earnings ESP of +0.63% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Corning Incorporated (GLW - Free Report) is +3.71% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Apr 25.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +8.00% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Apr 26.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.