Earnings & Revenue beat analysts expectations *AND gross margins grew!? Someone dig-in to these misleading numbers please?
https://www.cnbc.com/2020/07/20/ibm-earnings-q2-2020.html
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Also got a big boost from mainframe which is at peak of cycle due to new model released last September. Mainframe will likely be down year-over-year from Q4 onward until next mainframe released. Predicting Q3 similar to Q2, then Q4 onward major year-over-year decline.
The stock ended down yesterday. Big pop after hours Monday and at the open yesterday based on the headline ("IBM beats estimates!") then as Wall St started actually looking at the numbers they realized it was more of the same BS and hit the sell button. For the last decade it's been the same story - EPS up on share buybacks, layoffs, currency fluctuations, tax law changes, divestitures, etc. while Revenue continuously declines (and would be even worse without all the acquisitions).
"improves gross margins"
Moving almost a billion more (2Q2020 vs 2Q2019) to the Total Expense And Other Income line will do that.
The only number that matters:
Revenue $B
2011 106.9
2012 104.5
2013 99.8
2014 92.8
2015 81.7
2016 79.9
2017 79.1
2018 79.6
2019 77.1
2020 1H 35.7
Amusing to read given what we all know.
Aside from options and grants I would be surprised if IBM employees own more than a fraction of a percent of IBM stock. How could you?
Expectations were so low. The bump won’t last. Fundamentals remain the same. Revenue continues to drop. Year-over-year revenue dropped to $18.1 billion from $19.2 billion. There is absolutely nothing good in these results. Watch for more cost cutting measures to maintain EPS.
"Beating expectations" is nothing to brag about. It just means that IBM set analysts' expectations sufficiently low.
Yeah, it is always ALL about job cuts at IBM... that is the only thing they have left!
However, the company improved gross margins in three of its five units, partly thanks to job cuts.
So this explains the gross margin bump.