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Morgan Stanley Cuts IBM Estimates


Morgan Stanley cut its estimates for IBM (IBM).

Analyst Rebecca Runkle says hardware remains a low priority for 2002 IT spending, and adds that IBM may be experiencing a deterioration in signings for its Services group this quarter. She says mainframes remain the lowest hardware spending priority in 2002 based on the latest survey of corporate chief information officers. Runkle thinks the company is struggling to meet internal hardware targets; it initiated a 90-day payment deferral plan this quarter.

The analyst cut her $3.95 2002 EPS estimate to $3.85 and her $4.45 forecast for 2003 to $4.35. She feels her new estimates better reflect the current environment, and represent normal seasonality rather than a highly back-end loaded year. Runkle thinks consensus estimates for IBM are too back-end loaded. She is keeping her equal-weight rating on the shares.


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