Many views make a market, they say, and the oscillation in IBM’s share price over the past three months reflects the difficulty that analysts are currently finding in calling the company’s quarterly figures. A case can certainly be made for IBM shares as a strong recovery play – after all, they have entirely failed to participate in Wall Street’s bull market of the past 18 months, and at $163.875, down $1.25 on Tuesday, they are only back where they were in early 1986, having been down as low as $119 in the interim. The arguments for recovery are many – the newest E models of the 3090 are being shipped early, the Personal System/2 has got off to a strong start, 9370s are shortly to be shipped in volume, and the costs of the early retirement programmes are largely out of the way. But the arguments for caution are almost as strong – the dollar is unlikely to remain in the bargain basement for ever, the 3090 family is now mature, the 9370 doesn’t seem to have set the world alight in quite the way IBM intended, and IBM has only allayed, not dispelled, lingering doubts about the Personal System/2. All of which is reflected in the wide spread of forecasts for the quarter just ended. Ulric Weil is going for $2.10 to $2.15 a share, which would be as good as flat with the $2.12 achieved this time last year, but according to the Wall Street Journal, the consensus average is for another significant decline, to just $1.86.Steve Cohen of Gartner Group bravely puts numbers on the case for recovery, forecasting that IBM will earn $10.75 a share in 1988, up from his estimate of $8.75 this year – compared with $7.81 in 1986.
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