Here’s what Wall Street is saying about IBM ahead of earnings

Wall Street sees Q1 EPS $1.26, revenue $14.35B

IBM (IBM) is scheduled to report results of its fiscal first quarter after the market close on April 19, with a conference call scheduled for 5:00 pm ET. What to watch for:

GUIDANCE: Along with its last report, IBM guided for fiscal 2023 revenue growth consistent with the mid-single digit model, with the company adding it expects about $10.5B in consolidated free cash flow for the period, up more than $1B year-over-year. Analysts currently expect IBM to report FY23 revenue of $62.69B. Looking to Q1, Wall Street expects IBM to report earnings per share of $1.26 on revenue of $14.35B.

CREDIT SUISSE CUTS PT: Last week, Credit Suisse analyst Shannon Cross lowered the firm’s price target on IBM to $162 from $165 and keeps an Outperform rating on the shares ahead of the Q1 earnings report on April 19. The company is more insulated than others to a potential recession given recurring software revenue and AI assets, the analyst told investors in a research note.

JOB CUTS: In late January, IBM announced on its quarterly call plans to cut about 3,900 jobs, or roughly 1.5% of its global workforce. CFO James Kavanugh said the cuts will focus primarily on workers remaining after spinning off the Kyndryl and Watson Health units, and will cost the company roughly $300M. The executive added that the company still expects to hire in "higher growth areas."

GLOBALFOUNDRIES SUIT: GlobalFoundries (GFS) is suing IBM for trade secret misappropriation. "The complaint asserts the former semiconductor manufacturing company has unlawfully disclosed GF’s confidential IP and trade secrets, after IBM sold its microelectronics business to GF in 2015," GlobalFoundries said. "The technology at issue was collaboratively developed, over decades, by the companies in Albany, New York and the sole and exclusive right to license and disclose that technology was transferred to GF upon the sale. In the legal action filed in federal court in the Southern District of New York, GF asserts that IBM unlawfully disclosed GF IP and trade secrets to IBM partners including Intel and Japan’s Rapidus, a newly formed advanced logic foundry, and by doing so, IBM is unjustly receiving potentially hundreds of millions of dollars in licensing income and other benefits. The complaint notes that IBM’s executives have described the Intel and Rapidus partnerships as based on decades of technology derived from research conducted at the Albany NanoTech Complex, technology that they had no right to disclose. It also raises concerns over the extent to which IBM may have unlawfully disclosed GF’s IP and trade secrets beyond these two heavily publicized partnerships. GF is asking for compensatory and punitive damages as well as an injunction against IBM preventing further unlawful disclosure and use of GF’s trade secrets. In addition, GF’s complaint asserts that IBM is targeting and recruiting GF’s world-class engineering talent at the company’s manufacturing facility, which is located near the Albany NanoTech Complex. In the complaint, GF asks the court to end the unlawful recruitment efforts, which have accelerated since the IBM/Rapidus announcement in December 2022."

Keywords: fly intel, earnings, ibm, globalfoundries, job cuts