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The Gory Details on International Business Machines's Double Fumble

By Seth Jayson – Updated Apr 10, 2017 at 1:47PM

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Just the facts, Fool.

International Business Machines (NYSE: IBM) reported earnings on April 18. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), International Business Machines missed estimates on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue dropped. Non-GAAP earnings per share grew. GAAP earnings per share increased.

Gross margins grew, operating margins dropped, net margins expanded.

Revenue details
International Business Machines booked revenue of $23.41 billion. The 24 analysts polled by S&P Capital IQ foresaw revenue of $24.63 billion on the same basis. GAAP reported sales were 5.1% lower than the prior-year quarter's $24.67 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $3.00. The 25 earnings estimates compiled by S&P Capital IQ averaged $3.05 per share. Non-GAAP EPS of $3.00 for Q1 were 7.9% higher than the prior-year quarter's $2.78 per share. GAAP EPS of $2.70 for Q1 were 3.4% higher than the prior-year quarter's $2.61 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 45.6%, 50 basis points better than the prior-year quarter. Operating margin was 15.6%, 110 basis points worse than the prior-year quarter. Net margin was 13.0%, 60 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $25.48 billion. On the bottom line, the average EPS estimate is $3.55.

Next year's average estimate for revenue is $103.48 billion. The average EPS estimate is $16.73.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 4,353 members out of 4,789 rating the stock outperform, and 436 members rating it underperform. Among 1,064 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,005 give International Business Machines a green thumbs-up, and 59 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on International Business Machines is outperform, with an average price target of $223.62.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool recommends the following options: Long Jan 2014 $90 Calls on International Business Machines., Long Jan 2014 $0 Calls on International Business Machines., Long Jan 2014 $10 Calls on International Business Machines., and Long Jan 2014 $0 Puts on International Business Machines. The Motley Fool owns shares of International Business Machines. 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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