Call it a week: European IG and HY TMT update

研报英文原文证据摘录

Call it a week: European IG and HY TMT update

agement, and a flexible cost structure keep us

Neutral. The company maintains resilient profitability and free cash flow despite flat

RAN growth and competition. Recent divestments, including iconectiv and Aduna, have

streamlined operations and improved financial flexibility, with margins now in the mid-

teens. Ericsson’s substantial cash reserves and undrawn credit lines offer ample capacity

to manage industry cycles and invest strategically. The Equipment sector’s mid-term

outlook is positive, driven by network modernization, 5G rollout, and rising global

demand for advanced connectivity.

IBM (IBM): Reports preliminary results, as clients reprioritize capex plans; shares

drop >26%.

• IBM issued a negative pre-announcement for its 2Q26 results, primarily citing a

shortfall in mainframe and related software revenue. This was a key driver of the

stock move, as the company revealed that its 2Q revenue, margins, and free cash flow

(FCF) would fall materially below expectations.

• The weakness was attributed to a late-quarter shift in client capital expenditure

(capex) toward servers, storage, and memory, as clients sought to secure supply-

constrained infrastructure ahead of anticipated price increases (see our equity

counterparts note here). This shift led to weaker Z Systems performance and caused

several large deals to fail to close within expected timelines (as clients prioritize AI-

infrastructure related spend in near term). Infrastructure is expected to decline -7% y/y,

mainly due to the Z Systems shortfall and associated TP software. Distributed

Infrastructure was a bright spot, posting 37% y/y growth, but overall mainframe and TP

weakness led to a conservative outlook for the rest of the year.