Tuesday, October 18, 2016

Earnings - IBM & PM

International Business Machines(IBM) reported Q3 results with EPS(GAAP) of $2.98 on revenues of $19.2 billion. Overall Strategic Imperatives Revenues were up 16% YoY, and now represent 40% of company revenues. I was looking to see how revenues in their Watson unit would be this quarter. I must say I'm a little disappointed as Cognitive Solutions revenue only grew by 4.5%, although cloud sales within that segment grew by 75% which is a small bright spot.  It's clear the transition the company is unfolding can't still quite keep up with their declines in other former core areas. I'm still pleased overall with the results as they continue to make strong gains in areas that are pertinent for future success. The shares are taking it on the chin today trading as low as $147. Here is what the CEO had to say.

"IBM's third-quarter performance, led by continued double-digit growth in our strategic imperatives, is a testament to our leadership in cognitive solutions and cloud," said Ginni Rometty, IBM chairman, president and chief executive officer. "Our ability to apply deep expertise and breakthrough technology, led by Watson and the IBM Cloud, to massive amounts of data is enabling us to build new markets and transform industries. Whether it is banks implementing IBM blockchain solutions, hospitals leveraging Watson to fight cancer, or retailers using cognitive apps built on the IBM Cloud to transform the customer experience, clients across all industries are tapping into a new kind of innovation value from IBM."

Phillip Morris Intl(PM) reported Q3 results with adjusted EPS of $1.25 on revenues of $19.9 billion.  The company did increase it's dividend by 2.0% during the quarter to $4.16/share. The company also reported a nice increase in it's reduced risk IQOS HeatStick category as volume expanded to 2.1 billion units from 278 million YoY. The downside is it's cannibalizing it's traditional cigarette volume. The shares are trading slightly up with a 0.5% gain. Here is what the CEO had to say. 

“Our adjusted diluted EPS in the quarter increased by 4.0%, excluding currency, in line with our expectations," said AndrĂ© Calantzopoulos, Chief Executive Officer. We are confident that we will achieve our full-year reported diluted EPS forecast. We continue to anticipate annual volume in line with the September year-to-date decline of 3.9%, despite temporary volume weakness this quarter. We are particularly encouraged by the strong performance of iQOS across all of its launch geographies, particularly in Japan where HeatSticks recorded a quarterly share of 3.5%."

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