We’re about to get more detail on exactly how bad the mobile and cloud disruptions are for some of the titans of tech.
At IBM, one of the best stories in tech investing has hit a bit of a snag. In the first quarter, revenue came up short by 5 percent, and profit missed, too—IBM turned in $3 per share, versus the $3.05 expected. For the second quarter of the calendar year, the Street wants $25.4 billion in revenue, $3.77 in EPS.
The problem wasn’t so much the revenue, since Wall Street has been willing to stomach top-line whiffs in the past. The problem was the profit. IBM has given investors a multiyear EPS road map that relies mostly on its software and services businesses, and its ability to buy back stock at the right times.
IBM put the blame on currency headwinds in Japan and some deals the sales reps couldn’t close.
As a guy who watches a lot of these companies in the tech space, I’ve got to admit some skepticism. The deal slippage excuse? Sounds a lot like what Oracle said in the third quarter, but results still managed to disappoint in the fourth quarter.
And those currency headwinds in Japan? Still there. I’m expecting another so-so revenue performance from IBM, with job cuts and buybacks picking up some slack for the bottom line.
We’ll know it’s serious if IBM has to do a broader reorganization to cut costs and bolster non-GAAP EPS.
At Intel? I already heard from new CEO Brian Krzanich three weeks ago that he’s making structural changes, putting more emphasis on the Atom chip and removing layers of management.
It hasn’t been a great quarter for consumer PCs, with Windows 8.1 several months away and tablets (mainly Apple’s iPad) laying siege to the computing market.
The data center market is going to have to pick up the slack if Intel’s going to have a solid quarter (and outlook). Analysts expect $12.89 billion in revenue, 39 cents EPS. Hey, it’s come through before.
And finally, eBay. Here we have a stock that has nearly reached its all-time high and is trading at a 27 times P/E (17.5 forward). Expectations are high. And analysts have their consensus at the tippy-top end of eBay’s revenue guide, a penny above the EPS guide—$3.89 billion in revenue, 64 cents EPS.
This is one of those situations where even if eBay somehow manages to meet expectations for the current quarter, guidance will be challenging. But CEO John Donahoe and his crew have certainly done it before, and ChannelAdvisor e-commerce data suggest the marketplace business had a good quarter. We’ll have to see if PayPal did, too.