IBM, Intel Results Reflect the Sluggish Economy


Analysts continue to sift through the earnings reports from International Business Machines Corp. (NYSE: IBM) and Intel Corp. (NASDAQ: INTC). Each released relatively weak results for the most recent quarter. The fates of their share prices probably were spared because the numbers "beat expectations."

But that does not tell what the actual states of the information technology or PC businesses are. The data from the two companies would tend to indicate that the economic slowdown has hit consumer and enterprise buyers alike. If so, the step toward a recession and the fiscal cliff have become more widespread than many analysts expect. A person will not buy a $500 PC and a company will not use IBM consulting services. The effects of the economy could hardly be broader than that.

IBM management did admit that its sales problems were not isolated. The Wall Street Journal reports:

"We did start off the first two months of the quarter on a stronger trajectory than we saw for the full quarter," Chief Financial Officer Mark Loughridge said, noting a "handful of deals" in the software business "fell out of the quarter" and into the current period.

Douglas A. McIntyre