CSFB Downgrades IBM

Analyst Andrew McCullough says the company tied its quarterly miss to a late-quarter slowdown in services, hardware and a softness in four major countries

CS First Boston downgrades International Business Machines (IBM ).

Analyst Andrew McCullough says he is downgrading IBM to neutral from outperform. He says the company posted $22.9 billion in revenue, vs. his $23.4 billion estimate. His 85 cents earnings per share was in line with his recently revised estimate tied to equity compensation expense, but below his former $1.00 estimate.

He says the company tied the miss to a late-quarter slowdown in both services and hardware and softness in four major countries. He had hoped the company could offset cyclical forces with share gains across its business, but first-quarter results suggest his share-gain thesis may not hold true.

McCullough cuts his $5.02 2005 earnings per share estimate to $4.85, his $5.47 2006 earnings per share estimate to $5.20, and his $100 target to $80.

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