IBM just beat the Street’s earnings expectations on revenue and EPS. But, the stock’s getting crushed in after hours trading, down ~3%.A tipster suggests IBM is falling because it only delivered this EPS beat thanks to share repurchases. In the release, IBM says it made $3.7 billion of share repurchases.
It also says cash flow is down $200 million year over year.
Another worry spot, via the AP: “The value of the services contracts IBM signed during the quarter fell 7 per cent, to $11.0 billion.”
Here’s the key comparisons:
- Revenue was $24.3 billion versus street estimate of $24.12 billion.
- EPS was $2.82 versus estimates of $2.75.
- IBM is raising full year guidance to for EPS to $11.40. Analysts were expecting $11.29 for the year.
In the canned quote from the press release, CEO Sam Palmisano said, “Looking ahead, we are uniquely positioned in the enterprise, investing in high value segments like business analytics, advanced systems and smarter planet solutions. As a result, we are confident we can deliver strong business performance to grow profit, return value to our shareholders and to achieve full-year 2010 diluted earnings per share of at least $11.40.”