Wednesday 22 October 2014

IBM report Q3 2014

IBM, Q3, 2014, report, SEC, front page

The share price dropped with almost -10% for IBM upon, not due the release of their Q3 report, but based on their webcast. Still now, when I am writing this, the Q3 report is still not available online and I have therefore gone to the SEC data base to extract the number. This makes me very annoyed! The quick drop in the share price due to earnings not living up to the analysts expectations I can live with but to not publish the report online when everything else is already out just makes me mad!

If you want to read the full report from IBM then you can try to go here. However for this summary I used what I could find in SEC.

Dang it! Am I unlucky with the timing of buying companies or what? This is the first quarter report from IBM since I stepped in as a shareholder and already things are looking bad. Hahaha!

Looking at the highlight then we see a very grim presentation and at least when I counted it then there were in this short text ten either down or loss words used and that is never a good start of a report. i especially love the discontinued operations since it costed us 4.7 billion USD to get rid of Microelectronics. Come on guys! Why did you not give it to me? Especially since IBM will pay out 1.5 billion USD in cash during the next 1.5 years to the buyer if I understood it correctly. So next time you will pay the buyer money to take over the business inform me first and I will be prepared to step in! They even signed a contract which says that IBM will continue to buy the chips from Microelectronics for the next 10 years. I hope I have misunderstood it but otherwise I really wonder whose nephew is working in the buyers company.

Highlight, IBM, Q3, 2014

How was the then revenue during Q3? In my opinion was pretty ok. Considering that they have continued to get rid of all the hardware and focusing more and more on their services it looks ok to me. Sure it is always nice to see increasing revenue quarter by quarter but sometimes, at least in my opinion, it can be equally interesting to see decreased costs and remained revenue. As of yet we are down by -3.2% in revenue compared to in 2013.

Revenue, IBM, Q3, 2014

The net income got hit by the removal of the Microelectronics big time as can be seen below. So during Q3 we shareholders ended up with 18 millions or 2 cents per share in comparison to 3.68 USD per share last year. It is a big difference and looking at the running nine months the earnings per share are down by -30%.

Net income, IBM, Q3, 2014

What chocked me a little in this report was that the total equity has gone from 22.8 billion to 14.3 billion (a drop of almost -40%) while the liabilities have gone from 103.3 billion to 104.5 billion. I can live with equity decreasing a little now and then but usually I prefer to then also see a decrease in liabilities...

Conclusion: It costed IBM a lot to get out of Microelectronics and hopefully all the costs were booked during this quarter three. The only good news to me was that the revenue flow is still pretty flat.

If you want to find out more about IBM then please go to analysis of IBM 2014.

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