It would not be a good idea to look at IBM’s (IBM) superior earnings and assume that tech will have had a good third quarter and that the rest of the year looks super.
With quarterly revenue of over $25 billion, Big Blue has over two times the sales that Cisco (CSCO) does and nearly as big a lead over Microsoft (MSFT).
IBM posted a 22% increase in earnings-per-share to $2.05. It also affirmed its guidance of $8.75, also a 22% improvement.
IBM’s advantage over most of the rest of the industry is that its business is substantially international and it operates across hardware, software, and services. In the second quarter, IBM showed sales improvement in three out of four of its major operating units: technology services, business services, and software. When the details from Q3 come out, they are likely to look the same.
No matter how successful firms like Oracle (ORCL), Cisco (CSCO), Intel (INTC), and Microsoft (MSFT) are, they do business in one or two large sectors of tech, but do not cover as wide a swath as IBM does.
That is IBM’s advantage. It is also the reason that it is not a leading indicator for the balance of the industry.
Douglas A. McIntyre