International Business Machines Corp. (IBM), Microsoft Corporation (MSFT), Google Inc (GOOG): A Tech Tale of Conflicting Results

As it happens in astronomy, some planets cross each other’s orbits. Something similar became evident in stock markets with International Business Machines Corp. (NYSE:IBM), Microsoft Corporation (NASDAQ:MSFT), and Google Inc (NASDAQ:GOOG) reporting their quarterly numbers on the same day – April 18, 2013. These are not just important companies, but they share history too.

Microsoft Corporation (NASDAQ:MSFT) was the prodigy boy that sneaked the software game from under the nose of International Business Machines Corp. (NYSE:IBM) when the latter used to be the biggest game in technology space. As history would have it, David became Goliath and some decades later, it couldn’t see the internet revolution coming. Microsoft Corporation (NASDAQ:MSFT) was challenged and toppled by Google Inc (NASDAQ:GOOG) in something of an encore. So, when these companies report their contrasting fortunes on the same day, it makes for a memorable event.

Sale on IBM

International Business Machines Corp. (NYSE:IBM) lost nearly 8% after reporting that its first quarter revenue fell 5.1% to $23.4 billion, and reports emerged that the company is looking to cut up to 14% of its workforce in France. Despite the drop in revenue, the company managed to rationalize its costs and still posted 8% growth in earnings per share to $3. However, this fell short of analysts’ expectations of at least $3.05. The company was essentially saved by service segments with pre-tax income in Technology Services growing 7%, while Business Services pre-tax income jumped 17%.

On the contrary, the Systems and Technology segment dragged earnings by swinging to a loss of $405 million. Despite a disappointing first quarter, the International Business Machines Corp. (NYSE:IBM) chief executive is still hopeful of meeting a full year operating EPS guidance of $16.7. After the cut, the stock trades at a price earnings ratio of 14.3, which is quite attractive in itself, but further drops to 11.2 on a forward basis. The stock is now just around 6% above its 52-week low, indicating that current prices are very attractive.

Arch rival Microsoft Corporation (NASDAQ:MSFT)  had a better day as its shares were helped by announcements that it expected to lower operating expenses for the full year. Microsoft Corporation (NASDAQ:MSFT)’s quarterly revenue surged 18% to $20.5 billion, although it undershot Street expectations of $20.56 billion by a hair.

However, it was more than made up by a 19% increase in profit to $6.06 billion. In earnings per share terms, the $0.72 per share it reported was ahead of the $0.68 per share analysts were expecting. Revenue growth came in pretty strong in the Windows division, which got a boost of 23% despite global shipments of personal computers falling 14% during the quarter. As a result, the stock recovered smartly in morning trade on Friday last week after receiving a drubbing the previous week on concerns that falling personal computer shipments spelt doom for Microsoft Corporation (NASDAQ:MSFT).