Earnings Recap Cheat Sheet: IBM Tops Profits on Thinner Revenue, Issues Strong Guidance

Earnings: Q2 profits of $2.61 vs. $2.58 consensus and $2.32 in Q2 last year.

Revenue: Increased 2% YOY at $23.7 Billion vs. $24.17 Billion consensus. Note the BRIC countries revenue was up 22 percent, a strong sign for the emerging markets.

Raised Guidance: IBM chairman, President and CEO Samuel J. Palmisano stated, “We are confident of our ability in the second half of the year to continue our strong business performance, grow profit and drive shareholder returns. As a result, we expect full-year 2010 diluted earnings per share of at least $11.25.” The previous forecast for IBM full-year 2010 earnings per share was $11.20.

Comment: Shares of IBM (NYSE: IBM) sold off after-the-bell following the company’s earnings release, hitting highs $124.80 per share, or down 3.85% from the day’s closing price of $129.79 per share.

As you can see quite plainly on the chart above, shares have been choppy all year in a tight range. Though revenues were light for IBM and the share price is now trading after hours below the 50-day and 200-day moving averages, the low $120’s has presented buying opportunities for investors and traders. The most important metric always relies on forward guidance and the future. With IBM’s CEO reassuring better-than-expected annual profit guidance, you can expect IBM to find some footing following today’s report. Top-line growth will also need to improve in addition to IBM’s confident profit guidance for investors to become comfortable again with IBM shares.

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Disclosure: No holdings in IBM.

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