Analyst Laura Conigliaro lowered her EPS estimates for Q4 2001 to $1.25, from $1.40, and for 2002 to $4.55, from $5.05. She expects a weak first half for 2002 and a stronger second half. Conigliaro cut her estimates based on expectations for continued slowing in IT spending. Her new estimates suggest that, while IBM's numbers are likely to see less downside than many others given a strong annuity-like business base, half of its earnings are still economically sensitive, with IBM's top and bottom lines being more linked now than previously.
The shares remain on Goldman's recommended list, Conigliaro notes, since they provide some defensive characteristics for now, but have a greater opportunity for growth in a recovering economy.