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Monday, July 10, 2006

Calls of Note Part 4

- UBS is negative on IBM (NYSE:IBM) saying recent checks & a lack of publicly announced deals point toward lower than expected bookings for IBM. For 2Q06, they now expect signings of about $10B vs. $12-$13B previously given a weaker outsourcing market (also a major German Military contract now seems set to close in 2H06). Also, firm's checks point toward some weakness in high-end server sales.

Given bookings & hardware trends (both near-term & long-term), the firm is cutting their estimates. For '06 estimate adjusts to $5.75 from $5.80 factoring in lower services & hardware revenues, partially offset by higher intellectual property income & cost cutting. For '07 estimate adjusts to $6.20 from $6.25 reflecting the impact of lower services bookings this year.

Tgt goes to $82 from $90. Maintains Neutral.

Notablecalls: I think this is an actionable trading call. Pre-mkt shorting opportunity. Cut of such magnitude in signing ests is bound to generate pressure on IBM stock.

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