Tuesday, July 19, 2016

PM & IBM Earnings and Thoughts

Phillip Morris International(PM) reported Q2 EPS of $1.15 on revenues down 3.1% to $6.6 billion.The company raised guidance from $4.40-4.50 to $4.45-$4.55. Surprisingly the shares were down over 3%. Maybe this will be what gives me an opportunity to buy in the low 90's again.My hope is the company continues to focus on the Reduced-Risk Products. The company has more volatile earnings swings since the company operates internationally, but reports domestically in dollars. This year has been pretty wild in the currency markets. Especially in Europe, and some parts of Asia. Here is the CEO Andre Calantzopoulos had to say.

“Although our second-quarter results were generally in line with our expectations, our cigarette shipment volume was particularly impacted by declines in low-margin geographies. Nevertheless, we remain fully on track to deliver our full-year guidance, revised today for improving currency, which continues to represent a currency-neutral adjusted diluted EPS growth rate of approximately 10% to 12% versus 2015," said AndrĂ© Calantzopoulos, Chief Executive Officer.

"As previously communicated, we expect the growth to be skewed towards the second half of this year, and the fourth quarter in particular."

“A highlight of the quarter was our exceptional iQOS performance in Japan, whereHeatSticks reached a national share for the quarter of 2.2%, demonstrating the tremendous potential of the Reduced-Risk Products category."


IBM reported Q2 EPS of $2.61 on revenues of $20.2 billion down 3% from a year ago. The company expects full year EPS to come in at least $12.23. The shares have traded lower on the announcement, but in reality have had a pretty good run the last few months. I was really hoping for something better. It seems each quarter I'm looking for that blowout showing how well they are performing. It just seems their decline in legacy business keeps outstripping their growth in new areas.  A lot of that is due to stiff competition within many of their segments. A small part of me is wondering if I should bail, but I'm still a believer in their products. Besides from a valuation perspective I'm going to be hard pressed to find a place to re-invest at reasonable price. Here is what CEO Ginni Rometty had to say.

"IBM continues to establish itself as the leading cognitive solutions and cloud platform company. In doing so, IBM is pioneering new business opportunities beyond the traditional IT marketplace," said Ginni Rometty, IBM chairman, president and chief executive officer. "In the second quarter we delivered double-digit revenue growth in our strategic imperatives, driven by innovations in areas such as analytics, security, cloud video services and Watson Health, all powered by the IBM Cloud and differentiated by industry. And we continue to invest for growth with recent breakthroughs in quantum computing, Internet of Things and Blockchain solutions for the IBM Cloud."

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