IBM is a favorite among conservative investors for several
Some investors point to a dividend that has increased 17 years
in a row, and a payout that has more than doubled since early
2008. Others note the company's increased and successful focus on
The focus on margins has involved saying no to some
In the past decade, IBM has divested units that accounted for
about $15 billion in annual revenue. As the firm pointed out in
its 2012 annual report, "If we had not done so, we would be a
larger company today, but with lower margins."
When the company reports Q1 results after Thursday's close,
the Street expects earnings to come in at $3.05 a share, a 10%
increase vs. the year-ago period.
If IBM hits the EPS mark, the 10% increase will be the 16th
consecutive quarter of double-digit earnings growth.
Revenue is the key item. The Street sees IBM's revenue inching
up 0.1% -- virtually nothing -- to $24.69 billion. That would be
an improvement over the previous three quarters, which showed
declines of 3%, 5% and 1%. However, a substantial beat on revenue
-- the high estimate is a 3% pop to $25.42 billon -- could be a
Three factors are behind the sluggish sales. The world economy
is providing stiff head winds. The currency factor has trimmed
sales, pulling 2012 revenue down 2% (vs. flat in constant
currency). And the company continues to divest units. Last year,
the Retail Stores Systems was sold to Toshiba.
IBM has shaped a series of bases in the last year or so. None
has led to big moves. The stock currently is working on the fifth
week of a flat base. The potential entry is 216.
Considering the head winds in the stock market, this probably
is a time to be cautious.