Strategic CIO // Executive Insights & Innovation
Commentary
7/16/2009
10:31 AM
Bob Evans
Bob Evans
Commentary
50%
50%

Will IBM Earnings Indicate Bottom -- Or Free-Fall?

The not-so-good news is that IBM is expected to reporth declining revenue for the fourth straight quarter this afternoon. The good news is that the percentage decline expected for this quarter versus last quarter is almost flat, leading some analysts to speculate that the struggling economy might be bottoming out. The bad news? If they're wrong, it means we're in a free-fall.

The not-so-good news is that IBM is expected to reporth declining revenue for the fourth straight quarter this afternoon. The good news is that the percentage decline expected for this quarter versus last quarter is almost flat, leading some analysts to speculate that the struggling economy might be bottoming out. The bad news? If they're wrong, it means we're in a free-fall.As Forbes.com reports:

But as a bellwether for the tech sector, IBM's revenues paint a cautiously optimistic picture: The company's sales for the second quarter are expected to have dropped 12% year-over-year. That's still a slightly greater year-over-year revenue drop than the first quarter, when the company's sales fell 11.4% year-over-year. But last quarter's 11.4% drop was much bigger than the 6.4% drop in the fourth quarter of last year and a 4.9% gain in the quarter before that, all of which pointed to a far more troubling trend. IBM's expected 12% drop in the second quarter, by contrast, shows that the company's sales shrinkage has nearly stabilized.

Together, those numbers hint at smaller revenue declines over the next quarter and positive revenue growth by early 2010, says Andrew Bartels, an analyst with tech-focused Forrester Research. "We're at the part of the 'U' where the bend is flattening out," he says. "We'll see the bottom arrive in Q3, and then real revenue growth will actually come back."

Following comments yesterday from Intel's Paul Otellini about PC sales having bottomed out last quarter, the IBM earnings report will be scrutinized vigorously for indications of what might be construed for the overall economy. IBM will no doubt play its cards very cautiously, as it should, but in these troubled times, even an indication that the rate of revenue decline is slowing will be gobbled up as wonderful news.

Stay tuned - and don't toss out that life-preserver just yet.

Comment  | 
Print  | 
More Insights
The Business of Going Digital
The Business of Going Digital
Digital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest, Dec. 9, 2014
Apps will make or break the tablet as a work device, but don't shortchange critical factors related to hardware, security, peripherals, and integration.
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join us for a roundup of the top stories on InformationWeek.com for the week of December 14, 2014. Be here for the show and for the incredible Friday Afternoon Conversation that runs beside the program.
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.