What To Expect From IBM’s First Quarter Earnings

by Trefis Team
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IBM (NYSE:IBM) is scheduled to report its Q1 2018 earnings on April 17. The tech giant saw revenue growth in the December quarter after several quarters of mixed results and revenue declines. A key growth area for IBM in the last couple of years has been its Cognitive Solutions segment, while the company’s core Technology Services and Business Services segment revenues have largely stagnated. Global Business Services revenues have declined 2-3% in the last few years despite an increase in new signings. Similarly, Technology Services and Cloud Platforms revenue, which includes infrastructure services, technical support services, and integration software, also declined in low single digits through 2017. We forecast this trend to continue through the first quarter as well as for the full year.

As a result of an increasing mix of revenues from the high-margin Cognitive Solutions segment, we expect the company’s gross margin (non-GAAP) to expand 30-40 basis points to just under 45% for the quarter. Consequently, the company’s EPS is expected to be around 2-3% higher on a y-o-y basis to $2.44 for the , which is in line with the consensus EPS.

We have summarized our Q1 FY’18 expectations for IBM, based on the company’s guidance and our own estimates, on our interactive dashboard platform. If you think differently, you can change expected segment revenue, gross margin and net income margin for IBM to gauge how changes will impact its expected EPS.

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