Fly Intel: What to watch in IBM's earnings report
IBM (IBM) is scheduled to report results of its fiscal second quarter after the market close on July 17, with a conference call scheduled for 5:00 pm ET. What to watch for: 1. FY EPS GUIDANCE DOWN A TICK: Along with its last report, IBM reaffirmed its fiscal 2019 view for operating earnings per share of at least $13.90 on free cash flow of roughly $12B. At the time, analysts were expecting the company to report FY19 EPS of $13.91, but that figure has since fallen just a bit to $13.90, according to First Call. Analysts expect the company to report Q2 earnings per share of $3.07 on revenue of $19.16B. 2. RED HAT ACQUISITION: On June 19, Reuters reported that European Union antitrust regulators were expected to approve IBM's proposed $34B acquisition of Red Hat without demanding concessions. The European Commission a week later officially approved the deal without conditions. The Commission said at the time that it had concluded the deal would raise no competition concerns. IBM announced the official closing of the deal on July 9, saying in a statement that the acquisition positions the company as "the leading hybrid cloud provider" and accelerates its "high-value business model." In an interview with CNBC's "Mad Money" after the announcement, IBM CEO Ginni Rometty said that the Red Hat takeover extends the company's reach into the Cloud. In addition, Red Hat CEO Jim Whitehurst said that the deal involves "two cultures working to make something unique that we couldn't before." 3. JOB CUTS: Early last month, CNBC reported that IBM was planning to lay off roughly 1,700 employees. An IBM spokesperson told CNBC in an email at the time that the company was continuing to "reposition our team to align with our focus on high-value segments of the IT market." The same day, the Wall Street Journal reported that the company was cutting roughly 2,000 jobs that week. 4. DIVIDEND: On April 30, IBM's board raised its quarterly dividend to $1.62 per share from $1.57. CEO Rometty at the time said, "Our strong cash generation has enabled IBM to invest aggressively in the emerging, high-value segments of our industry, while continuing to return capital to our shareholders."