IBM (IBM) reports third-quarter results late Wednesday, and is expected to provide a look at the state of corporate spending on technology. IBM stock was trading flat.
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The company has been undergoing a lengthy multiyear business transition that has resulted in struggles with revenue growth. IBM stock is down 30% this year.
Wall Street analysts expect adjusted earnings of $1.79 a share, down 26% from the year-ago period. Revenue expectations are $13.5 billion, roughly the same as the year-ago period.
About half of IBM’s revenue comes from overseas.
IBM Stock: Durability Faces A Test
IBM stock was trading flat, near 13, during morning action on the stock market today.
“No surprise but a strong dollar will dampen revenue, soaking up any chance of meaningful topline improvement on a reported basis,” CFRA analyst David Holt said in a note to clients.
He added: “We think IBM’s durability and investment proposition will be tested in the coming months, especially as investors start to put together logical scenarios for 2023 and beyond, especially without a big boost from (IBM’s spinoff legacy IT business) Kyndryl and peak mainframe cycle dynamics.”
In addition, Holt said, “We remain sidelined on the name and prefer a wait-and-see approach to see how the long-term story plays out.”
Over the past decade, IBM has invested more than $120 billion in remaking the company. This includes $29 billion in capital expenditures for things like scaling its cloud operations and artificial intelligence offerings and bolstering its security and services capabilities. The major shifts in business operations help to explain why growth in revenue and earnings has been erratic.
IBM reported second-quarter results in July that beat estimates, but with a forecast on free cash flow that fell short. IBM stock jumped on the report.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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