Analyst John Jones says after performing part of his fourth quarter channel checks, he expects IBM's fourth quarter earnings per share to beat the consensus estimate of $1.30, and come closer to his $1.36 estimate. Jones says U.S. operations finished above plan, and services revenue grew 4%, excluding services from PricewaterhouseCoopers' consulting arm, PwC Consulting, which IBM acquired in July.
Jones sees a record year for service revenues; he now forecasts about $18 billion in fourth quarter service bookings vs. the $15 billion prior estimate, bringing 2002 bookings to a range of $52 billion to $53 billion.
He says recent large deal announcements suggest a big deal logjam may be breaking up. Jones sees $3.97 2002 earnings per share, and $4.55 for 2003. He reiterates his outperform rating, and keeps his $105 target.
On Monday the technology company announced a seven-year, $5 billion outsourcing contract with J.P. Morgan.