Thursday, January 24, 2013

IBM Earnings Review and Charts

IBM reported QE December 2012 financial results on January 22

"We achieved record profit, earnings per share and free cash flow in 2012. Our performance in the fourth quarter and for the full year was driven by our strategic growth initiatives -- growth markets, analytics, cloud computing, Smarter Planet solutions -- which support our continued shift to higher-value businesses," said Ginni Rometty, IBM chairman, president and chief executive officer.

"Looking ahead, we continue to invest to deliver innovations for the enterprise in key areas such as big data, mobile solutions, social business and security, while expanding into new markets and reaching new clients. We are well on track toward our long-term roadmap for operating EPS of at least $20 in 2015."


Intel Earnings Review: Decline Continues

Intel reported QE December 2012 financial results on January 18

Intel earnings continue deteriorating. Financial performance is slowing for both revenues and earnings per share. Earnings per share of $0.48 is an 11-quarter low. Gross, operating, and net margins peaked in 2010, had recently been somewhat stable, and now are decreasing. Liquidity is strong. Capital is adequate, but the capital to assets ratio is decreasing.

CEO Paul Otellini continues to promise better days ahead through innovation. Meanwhile, technology races away from the Microsoft / Dell / Intel desktop way of life. The future benefit of sizable capital expenditures, along with research and development expenses, have yet to be realized. It is difficult to discount the intelligent people at Intel Labs, but their efforts have yet to reach the bottom line. The revenue outlook for the next quarter, QE March 2013, is a multi-year low (lowest since December 2010).

This chart is not what shareholders want to see.

Intel revenues have been flat and may decrease. Operating and net income have been decreasing.

Gross margin of 58.0% dropped to a 13-quarter low, operating margin of 26.6% hit a 12-quarter low, and net margin of 18.3% sank to a 9-quarter low. Both gross margin and operating margin are now below the long-term averages.

Intel did not report regional revenues this quarter, which is not encouraging. Segment revenues were:

Intel Outlook

Q1 2013 (GAAP, unless otherwise stated)
* Revenue: $12.7 billion, plus or minus $500 million.
* Gross margin percentage: 58 percent, plus or minus a couple of percentage points.

"The fourth quarter played out largely as expected as we continued to execute through a challenging environment," said Paul Otellini, Intel president and CEO. "We made tremendous progress across the business in 2012 as we entered the market for smartphones and tablets, worked with our partners to reinvent the PC, and drove continued innovation and growth in the data center. As we enter 2013, our strong product pipeline has us well positioned to bring a new wave of Intel innovations across the spectrum of computing."


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