What To Expect When IBM Reports Fourth-Quarter Earnings
Summary
Fourth-quarter IBM earnings are due after the close Tuesday, with analyst focusing on a recent acquisition and strategic imperatives. The Red Hat acquisition strengthens IBM as a major cloud provider and significantly improves its competitive positioning relative to Amazon ( AMZN ), Microsoft ( MSFT ), and Alphabet ( GOOGL ), wrote KeyBanc Capital Markets analyst Arvind Ramnani in a note to clients. "Based on conversations we have had with investors, the concern has been around the ability for the combined entity to retain Red Hat employees and that IBM may have overpaid, despite the acquisitions transformational potential," he wrote. When it reported third-quarter results IBM beat analyst estimates on adjusted earnings but missed revenue expectations. "While imperfect, IBM is our preferred tech defensive play given high annuity revenue, a likely return to sales growth, and a low valuation," he wrote.
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