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Earnings Previews: International Business Machines Corp., Qualcomm, Inc.

We’re expecting the IBM 2Q:17 and Qualcomm 3Q:17 earnings reports this week after Netflix kicked off the reporting period for the technology sector last night. International Business Machines is scheduled to report on Tuesday after closing bell, while Qualcomm is scheduled to release its next earnings report on Wednesday after the market closes.

IBM 2Q:17 earnings report

IBM 2Q:17

Wall Street expects the IBM 2Q:17 earnings report to reveal earnings per share of $2.75 per share on $19.45 billion in sales. In last year’s second quarter, the technology bellwether posted $2.95 per share in earnings on $20.2 billion in revenue.

Drexel Hamilton analyst Brian White is expecting a miss on sales in the IBM 2Q:17 earnings report, as his estimate stands at $19.1 billion. His earnings per share estimate is in line with consensus, and he said he expects at least that, if not a beat on the bottom line.

He noted that IBM is currently transitioning its product portfolio to include more next-generation technologies, so he’ll be using the company’s strategic imperatives division to measure the success of its transformation. During the first quarter, the company increased its strategic imperatives revenue 13% year over year, bringing it to $7.8 billion. As a result, White believes Wall Street wants to see another growth percentage in the double digits. The strategic imperatives business includes cloud sales, which surged 35% year over year in the first quarter, bringing them to $3.5 billion.

For the third quarter, Wall Street is currently expecting earnings of $3.38 on $18.8 billion in sales. The company’s stock closed down 0.8% at $153.01 on Monday ahead of the IBM 2Q:17 earnings report expected on Tuesday.

Qualcomm 3Q:17 earnings report

Qualcomm 3Q:17
See page for author [Public domain], via Wikimedia Commons
In the Qualcomm 3Q:17 earnings report, analysts are looking for earnings of 81 cents per share on $5.26 billion in sales. In last year’s third quarter, the chip maker posted $1.16 per share in earnings on $5.6 billion in revenue.

Qualcomm has been dealing with litigation and royalty issues as the battle with Apple heats up. The chip maker cut $500 million from its sales outlook for its third fiscal quarter, as some royalty payments have been withheld. Apple attacked the company’s business model in court and said it charges too much in royalties, but Qualcomm is demanding what it says Apple owes. This legal battle is likely to drag on for years.

The chip maker has already been handed a defeat in another case. Qualcomm and BlackBerry announced earlier this year that the arbitration between them was settled, with the chip maker being ordered to pay $815 million to the Canadian firm. That payment likely also had an impact on Qualcomm’s bottom line during the second quarter, but it doesn’t exactly come as a surprise.

The chip maker’s stock closed down 0.62% at $56.46 on Monday before the Qualcomm 3:17 earnings report.

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