Analyst Conference Summary

symbol: IBM

conference date: January 17, 2008 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2007 (4th quarter)

Forward-looking statements

Partial summary from press release and published prepared remarks. The geniuses at IBM put the recording of the conference on a Web server without a known DNS address. I probably won't ever get back to see if they have done a fix.

Overview: As pre-announced, a great quarter for IBM.

Basic data:

Revenues were $28.87 billion, up 20% sequentially from $24.1 billion and up 10% from $26.26 billion in Q4 2006.

Net income was $3.95 billion, up 65% sequentially from $2.4 billion and up 11% from $3.54 billion year-earlier.

Earnings per share (EPS) were $2.80, up 67% sequentially from $1.68, and up 21% from $2.31 year-earlier.


EPS growth of 15 to 16% over 2007 base, or $8.20 to $8.30 for full 2008.

2010 roadmap is for $10 to $11 earnings per share.

Conference Highlights:

Record revenue and profit was led by Asia, Europe and emerging countries. 65% of revenue was generated outside the U.S.

Revenue by geography: Americas $11.7 billion, up 5%; Europe/Middle East/Africa (EMEA) $10.8 billion, up 16%; Asia-Pacific $5.5 billion, up 15%.

OEM revenues were $894 million, down 13% from year-earlier.

Revenues by segment: Global tech services $10.0 billion (up 16% y/y); global business services $4.9 billion (up 17%); systems and technology $6.8 billion; software $6.26 billion; global financing $668 million; other $212 million.

$15.4 billion in new business was signed in global services segments. Business Transformation Outsourcing was up 56%. Green Data Center services getting good reception.

$12.4 billion in free cash flow; cash balance ended at $16.1 billion. $19 billion in shares were repurchased in 2007, reducing share count by 8%. But has $35 billion in debt.

Of the 9% growth in Q4, 5% was due to currency changes.

Because of the strong year, bonus compensation to non-executive employees was almost $300 million, impacting gross margin by 0.5%.

Effective tax rate was 28%.

New quad-core servers sold out in quarter. Storage had revenue up 11%, and tape was up 22%. Acquisition of XIV will help with Web 2.0 applications.

2008 looks good. Services businesses started year with $118 billion backlog.


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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2007, 2008 William P. Meyers