Instant view: IBM raises outlook but shares slip

SAN FRANCISCO (BestGrowthStock) – IBM (IBM.N: ) nudged up its outlook for the full year and reported stronger than expected results as more companies bolstered spending on software and consulting on hopes of a sustained recovery for the technology sector.

Commentary:

MARK DEMOS, PORTFOLIO MANAGER, FIFTH THIRD ASSET MANAGEMENT

“Was it a bad quarter? No. But from what we’ve seen from everyone else, they’ve been beating revenue and earnings handily.

“The overall economic environment should have pushed them perhaps a little higher than they came in. They beat and they gave guidance for the rest of the year, but it wasn’t great.

“Services signings by all measures probably should have been higher.

“In general, what’s going to get the stock moving is if people see top-line growth. And this is another company where you really didn’t see enough to get you interested.

“You have a company that’s simply not going to grow as fast as other tech companies.”

PETER MISEK, ANALYST, CANACCORD ADAMS

“Margins were slightly below what we expected but they made up for it in other areas. Importantly, we saw continued momentum in software and consulting, that to me was important.

“So overall, a solid report. This wasn’t a blockbuster or blowout report but it was solid.”

BRIAN MARSHALL, ANALYST, BROADPOINT AMTECH

“This was a normal seasonal quarter, nothing more, nothing less. Investors should not be expecting large OEM technology companies to be posting any material upside unless you’re a real secular grower, like Apple for instance.

“In this environment, where the waters, or economic climate, is pretty calm, I don’t think you want to be in the big slow-growth tanker ship. When the waters get very choppy, that’s when you want to jump into the tanker ship because you’ll be safe. But right now, I think you want to prefer companies with faster growth profiles.

“This is the first quarter since we’ve been in this recovery, which has been over the past nine months or so, where we won’t be seeing any material upside. And people need to brace themselves for that.”

RICHARD SICHEL, CHIEF INVESTMENT OFFICER, PHILADELPHIA TRUST CO

“They definitely beat the numbers and gave an upbeat year-end forecast, and the stock did move up just a bit before the close. They may be giving some of that back right now. There were some currency adjustments because of the weak euro and I think that did have an impact on some the revenues.

“We look at IBM as a core holding and think that IT spending will be rising more than expected over the next couple of years.”

(Reporting by Gabriel Madway and Ian Sherr in San Francisco)

Instant view: IBM raises outlook but shares slip