SoundView Says IBM to Beat Targets

Analyst John Jones says channel checks show that U.S. and service revenues came in ahead of plan

SoundView says it expects IBM Corp.'s earnings to beat consensus estimates by six cents.

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.

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