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IBM (NYSE: IBM) Earnings Disappoint Fickle Investors - Mike Swanson (07/20/10)

Submitted by Mike Swanson on Tue, 2010-07-20 07:19.

Monday there was a lot of excitement over IBM earnings as the DOW and S&P 500 traded up into the close. CNBC reporter Maria Bartiromo made the comment “the stock market is on fire” as the market closed. Then IBM released its earnings results which displeased stock traders.

Despite beating analyst earnings estimates and guiding its 2010 net income forecast higher traders sold off the stock in afterhours action for a more than 4% drop.

Although IBM reported that its net income jumped 9% in the April to June quarter, which topped analyst estimates by reporting earnings of $2.58 per share when analysts were expecting $2.34 per share of earnings, they reported revenue of $23.3 billion which was short the $24.2 billion, which analyst were expecting.

Instead of being happy about the top line figures traders and investors looked for negative things in the report. They focused on the fact that the company reported a 12% decline in service contracts in the last quarter and said that currency fluctuations over the week euro and Greece debt crisis caused it to lose $500 million in revenue.

Earnings season started last week and almost all companies that have reported earnings no matter whether they or good or bad have seen their stocks drop after their earnings news has come out. It seems that traders are using any news good or bad to sell stocks in this market environment.

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