IBM is scheduled to report Q1 earnings tonight after the bell with a conference call scheduled to begin at 5:00 p.m. ET (for context, IBM reported at 4:08 p.m. ET last quarter).

Capital IQ Consensus Estimate calls for Q1 EPS of $2.35 (compared to $2.35 a year ago) on revenues of about $18.37 bln. 

IBM will likely update guidance for FY17 tonight; as it stands, the Cap IQ Consensus is calling for EPS of $13.78 vs guidance of "at least" $13.80 on revenues of about $78.63 bln. 

In Q4, gross profit margins were down 1.8 basis points to 51.0%. Also, IBM's Q4 enjoyed a lower tax rate, and the company expects to benefit from discrete tax again in Q1, though smaller in size.

TECHS:

Technically, IBM is off -7% from its February highs of $182. It has been holding along its long-term uptrend line off the 2016 lows. Below the 164 trend line and the 200D next major support is the November bullish gap/December lows at the 157/158 area.

OPINION:

I don't know if this will move a lot after earnings to the downside or if dip buyers will pester the decline. However, if it breaks the trend line it will fall precipitously. Because of this I want to play the APR28 162.5P. I don't want to miss out if it falls apart and find the risk reward appetizing.

IBM beats by $0.03, misses on revs; reaffirms FY17 EPS guidance  

  • Reports Q1 (Mar) earnings of $2.38 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $2.35; revenues fell 2.8% year/year to $18.16 bln vs the $18.37 bln Capital IQ Consensus. 
  • First-quarter cloud revenues increased 33% (up 35% adjusting for currency) to $3.5 bln. Cloud revenue over the last 12 months was $14.6 bln. The annual exit run rate for cloud as-a-service revenue increased to $8.6 bln from $5.4 bln in the first quarter of 2016. Revenues from analytics increased 6% (up 7% adjusting for currency). Revenues from mobile increased 20% (up 22% adjusting for currency) and revenues from security increased 9% (up 10% adjusting for currency). 
    • Cognitive Solutions (includes Solutions Software and Transaction Processing Software) -- revenues of $4.1 bln, up 2.1% (up 2.8% adjusting for currency) were driven by growth in analytics and security, which include Watson-related offerings. 
  • Co reaffirms guidance for FY17, sees EPS of at least $13.80, excluding non-recurring items, vs. $13.78 Capital IQ Consensus Estimate.

FINAL TAKE: TWENTY STRAIGHT YEARS OF REVENUE DECLINES