When reports surfaced last month that IBM (NYSE:IBM) planned to ship as many as 5,000 jobs to India and other parts of the world, the worrywarts piled on. With good reason, as it turned out.
Big Blue reported $21.71 billion in first-quarter revenue, down 11%. That's roughly $800 million less than the average analyst estimate, according to Reuters. A stronger dollar was at least partly to blame; revenue fell just 4% after adjusting for currency fluctuations, management said.
Even so, it appears that IBM's cost-cutting measures -- which I thought it was making to prepare for a deal with Sun Microsystems (NASDAQ:JAVA) -- were more necessary than optimistic. The good news? Making them early paid off.
Big Blue turned a top-line miss into a bottom-line beat. Diluted per-share earnings rose 4% to $1.70, besting the Street consensus by $0.03. Huge buybacks -- thinning shares outstanding by 4.4% -- fueled most of the gains.
Yet IBM arguably has as much (if not more) cause for optimism than Google (NASDAQ:GOOG) or Intel (NASDAQ:INTC), both of which reported good results last week. "We remain ahead of pace for our 2010 roadmap of $10 to $11 per share," IBM CEO Sam Palmisano said in a statement. Big Blue's management also reiterated full-year 2009 guidance of $9.20 per share.
It'll have to hit that mark without the benefit of Sun, which Oracle (NASDAQ:ORCL) acquired yesterday for $5.6 billion net of cash, or $9.50 per share. Hewlett-Packard (NYSE:HPQ), meanwhile, recently introduced a new box of blade servers it calls "Matrix" to help battle Big Blue, Oracle/Sun, and would-be server usurper Cisco (NASDAQ:CSCO).
A tough economy. Tough competitors. Things never get easy for IBM, but the company's more than making do all the same.
Get your clicks with related Foolishness:
- With tech stocks going cheap, now is your dare-to-be-great moment.
- Big Blue isn't betting on Satyam, is it?
- Let the tech stock feeding frenzy begin.
