IBM (IBM) is scheduled to report results of its fiscal fourth quarter after the market close on January 22, with a conference call scheduled for 5:00 pm ET. What to watch for:
1. FY18 EPS CONSENSUS UNCHANGED: Along with its last reported, IBM maintained its adjusted earnings per share guidance for fiscal 2018 of at least $13.80. At the time, analysts were expecting the company to report FY18 EPS of $13.80, and that consensus estimate remains unchanged. IBM noted in its last report that operating diluted EPS for the year exclude $2.20 per share of charges for amortization of purchased intangible assets, other acquisition-related charges, retirement-related charges and any one-time impacts from the enactments of U.S. Tax Reform.
2. RED HAT: On October 28, IBM and Red Hat (RHT) announced that they had reached a deal under which IBM would acquire all issued and outstanding common shares of Red Hat for $190 per share in cash, representing a total enterprise value of roughly $34B. At the time, the companies said that they expect the transaction to close in the latter half of 2019. Last week, Red Hat said that its shareholders voted to approve the merger.
3. STOCK BUYBACK: On October 30, IBM announced that its board authorized $4B in additional funds for use in the company's stock repurchase program. The amount authorized added to the approximately $1.4B remaining at the end of September 2018 from a previous authorization. At the time, IBM chairman, president, and CEO Ginni Rometty said, "Our strong cash generation allows IBM to both invest in world-class innovations and to return money to shareholders."
4. HCL TECHNOLOGIES: In other M&A news, IBM said in early December that it reached a definitive agreement with HCL Technologies under which HCL will acquire IBM software products for $1.8B. The companies said at the time that the transaction is expected to close by mid-2019. The software products in scope included Appscan, BigFix, Unica, Commerce, Portal, Notes & Domino, and Connections.
5. PENTATON CLOUD DEAL: On December 12, Bloomberg reported that the U.S. Government Accountability Office rejected IBM's challenge to the Pentagon's $10B Joint Enterprise Defense Infrastructure contract after the company argued that the single award competition violated procurement statutes and regulations and the Pentagon failed to consider potential conflicts of interest. The GAO's decision came after Oracle (ORCL) protested and lost a case on the contract, which is seen as favoring Amazon (AMZN), with the office upholding the government's approach, the report noted.
IBM
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Red Hat
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Oracle
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Amazon.com
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