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What to Expect from IBM’s 3Q17 Earnings

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What to Expect from IBM’s 3Q17 Earnings PART 1 OF 15

Could IBM Post Revenue Growth in 3Q17?

IBM’s expected 3Q17 earnings

In this earnings season, International Business Machines (IBM) is scheduled to announce its 3Q17 results on October 17, 2017.

Although IBM is pursuing its strategy of acquisitions and partnerships to post growth in the cloud space, its initiatives have failed to deliver the desired results.

Could IBM Post Revenue Growth in 3Q17?

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In 3Q17, IBM is expected to report revenues of ~$18.7 billion and non-GAAP1 EPS of $3.28, as reported by Estimize Research.

In the chart above, you can see IBM’s quarterly revenue performance over the last couple of years. Despite its continued fall in revenues, IBM has exceeded its bottom line expectations for ten consecutive quarters.

IBM’s trend of no revenue growth

In 2Q17, IBM reported revenues of ~$19.3 billion and non-GAAP EPS of $2.97. On a year-over-year basis, IBM’s revenues fell 4.7% in 2Q17, marking its 21st consecutive quarter of no revenue growth.

IBM’s 2Q17 earnings continued its trend in EPS, beating the analysts’ estimates. IBM’s EPS grew 1.0% in 2Q17 on the back of the low corporate tax rate of 4.5%.

The technology sector is a dynamic space. IBM’s failure to report growth for more than five years indicates that the company has been on the wrong side of the growth wave for too long. Despite initiatives and investments in AI (artificial intelligence), IoT (Internet of Things), security, cloud, and other rapidly growing technologies, IBM appears to be stuck.

On October 17, 2017, we’ll see whether IBM’s fiscal earnings are repetitive, as has been the case for the last five years, or whether the company is on the verge of breaking out of the cycle.

  1. generally accepted accounting principles
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