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Earnings To Watch: Intel, IBM, eBay

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Earnings Estimates

Like every earnings season, technology stocks have always been popular stocks to watch. But this time they will be more keenly watched as effects of mobile and cloud disruptions will play an important role in the upcoming earnings of tech stocks like International Business Machines Corp. (NYSE:IBM), Intel Corporation (NASDAQ:INTC) and eBay Inc (NASDAQ:EBAY). Let’s take look at what to expect from these tech giants.

Earnings To Watch: Intel, IBM, eBay

Profit Main Concern For IBM

For the first quarter, International Business Machines Corp. (NYSE:IBM) reported a decline in revenue by 5 percent and profit was also less than the expectations. Earnings per share for the company came in at $3 per share compared to $3.05 estimated. For the second quarter of fiscal 2013, analysts are expecting revenue to be at $25.4 billion and EPS of $3.77 per share.

Decline in revenue was not the problem, according to analysts—it was the profit which was the main concern. Earnings per share and profit estimates given by International Business Machines Corp. (NYSE:IBM) to the investors depends upon software and services businesses, along with the capability of the company to buy back shares at the right time.

IBM said that currency headwinds were the major reason for the decline in profit along with failure of sales representatives to close deals. It will be a major reason of concern if IBM goes the reorganization way to slash its costs and increase non-GAAP EPS, according to a report from CNBC.

Many Problems for Intel

Intel Corporation (NASDAQ:INTC)’s newly appointed CEO Brian Krzanich said that the company is undergoing structural changes and is giving more thrust to Atom Chips along with reducing multilevel management. This quarter, PC sales have been on the decline owing to the dominance of tablets like Apple’s iPad. Aggravating the problems, Windows 8.1 is also not launching early.

For the second quarter, analysts are expecting revenue to come in at $12.89 billion and earnings per share of 39 cents.

Paypal an Important Segment for eBay

eBay Inc (NASDAQ:EBAY), which almost breached its all-time high, is trading at 27 times P/E (17.5 forward). Analysts are expecting more from eBay as they have estimated revenue of $3.89 billion and earnings per share of 64 cents.

eBay is facing a major challenge regarding the guidance, even if it posts results in line with the expectations of analysts. However, CEO John Donahoe and his team have faced this kind of challenge before, and according to ChannelAdvisor e-commerce data, eBay will perform well.

eBay has been benefited to a great extent from PayPal, which continues to add to eBay revenues by expanding its footsteps and offline presence globally. PayPal is in turn benefiting from a shift in users’ focus from only eBay to other merchant services, tie-ups with Discover Financial Services and NCR, expansion in other geographies, and igniting the usage of mobile devices for shopping and payments. Paypal and marketplaces businesses account for almost 85 percent of eBay’s value.

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Aman Jain
Personal Finance Writer

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