Ahead of the Bell: IBM likely to post stronger 2Q

AP News
Posted: Jul 18, 2012 6:29 AM

NEW YORK (AP) — The uncertain global economy will serve as a challenging backdrop as IBM Corp. reports its quarterly financial results Wednesday.

IBM is the world's largest technology-services company. Its results provide a gauge of the global business appetite for technology spending.

Because IBM's earnings often beat Wall Street's expectations, revenue growth tends to be a focus for investors. In the first quarter, the company fell shy of revenue estimates. While software and services revenue increased, its hardware and financing segments saw a decline. IBM has been focusing on its software and services offerings lately, which have higher profit margins.

Credit Suisse analyst Kulbinder Garcha said that the unsteady economy and increasingly challenging comparisons with last year will likely constrain revenue growth for the second quarter.

On Tuesday, chipmaker Intel Corp. said the weak global economy is slowing its growth. Earlier this month, Intel rival Advanced Micro Devices Inc. lowered lowering its guidance because of weaker-than-expected sales in China and Europe and lackluster demand overall from consumers.

Analysts, on average, are expecting IBM to report second-quarter earnings of $3.43 per share on revenue of $26.3 billion, according to FactSet. A year earlier, IBM earned $3.66 billion, or $3 per share, on revenue of $26.7 billion.