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Tuesday, July 18, 2006

IBM Up on Relief and Backlog

IBM (IBM) is trading up 2% after-hours around the $76.00 mark after beating earnings expectations. The company didn't exactly give the best report in the world, but it is keeping its costs lower. It earned over $2 Billion in net income to show EPS of $1.30, compared to $1.29 EPS estimates and $1.12 for the same quarter last year. Revenues were mostly in-line at $21.89 Billion, which isn't exactly showing a crummy IT-consulting environment.

We'll have to see if this helps out the other IT-Consultants such as Computer Science (CSC), Electronic Data (EDS), Accenture (ACN), Perot Systems (PER), Affiliated Computer Services (ACS), Satyam (SAY), and Infosys (INFY).

As we noted yesterday, you had to wonder just how much negative news was being priced in for this earnings report. With this showing everything in-line this should help bolster shares, barring any horrible guidance that the street wasn't smart enough to see ahead of time.

It ended the quarter with $10.0 Billion in net cash and said it bought $2.5 Billion worth of stock. IBM shares were down over $10.00 from its highs in the quarter, so imagine how bad that would have looked if they didn't purchase $2.5 Billion worth of stock.

IBM signed services contracts totaling $9.6 billion and ended the quarter with an estimated services backlog, including Strategic Outsourcing, Business Transformation Outsourcing, Global Business Services, Integrated Technology Services and Maintenance, of $109 Billion.

Jon C. Ogg
July 18, 2006
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