What to Expect From IBM Today

We'll get a better understanding how the tech sector is performing when IBM (NYSE: IBM  ) reports fourth-quarter earnings after the bell today. Here's a closer look at what analysts expect:

Metric

Q4 2011 (est.)

Q4 2010

Estimated Growth

Revenue

$29.71 billion

$29.02 billion

2.4%

Earnings per Share

$4.62

$4.18

10.5%

Source: Yahoo! Finance.

Let's hope Wall Street has it right. According to Capital IQ, Big Blue has booked double-digit EPS gains for seven consecutive quarters. Not bad for a company that trades for just 12.3 times current-year estimates.

Three more things to watch
As business-focused investors, there are several IBM initiatives we're interested in. Here are three things I'm particularly hoping to hear more about:

  • Large contracts. Ever since its acquisition of Sun Microsystems, Oracle (Nasdaq: ORCL  ) has positioned itself as IBM's main rival as a full-service supplier of hardware and software to large enterprises. Did Big Blue grow its backlog of big contracts from $137 billion at the end of Q3? What role is acquired data analytics technology playing in winning engagements?
  • Smarter planet. At last count, revenue from IBM's initiative for creating more intelligent cities was up 50% through the third quarter. But what exactly does that mean? What projects are fueling this growth and how repeatable might they be in other regions on the world?
  • Dividends. Most of the large tech companies now pay dividends. Both Hewlett-Packard (NYSE: HPQ  ) , at 1.8%, and Microsoft (Nasdaq: MSFT  ) , at 2.8%, yield more than Big Blue's 1.7% dividend. But IBM also has boosted its dividend payment by 23% annually over the past five years, more than any other Dow 30 component. Is another big increase in the works?

What do you expect to see from IBM? Let us know by leaving a comment below.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of IBM at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of IBM, Microsoft, and Oracle. Motley Fool newsletter services have recommended buying shares of and creating a bull spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On January 19, 2012, at 12:24 PM, yhtbaotbai wrote:

    Palsimano was wonderful! ((I hope I spelled his name properly.)) Another reason I am comfortable with IBM in my portfolio is that they are an old company and have successfully encountered a great variety of challenges from time to time, over the years.

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