Menu
IBM net income jumps 9 percent

IBM net income jumps 9 percent

Big Blue also raised its full-year outlook to $11.25 per share

IBM's second-quarter profits were up 9 percent from a year earlier, the company announced on Monday, with increased sales in the U.S. and Asia helping to offset weaker spending in Europe.

Net profit for the quarter ended June 30 was US$3.4 billion, or $2.61 per share, up from $3.1 billion, or $2.32 per share, in the same quarter last year, IBM said. Revenue was $23.7 billion, up 2 percent year over year.

IBM also raised its earnings outlook for the year to at least $11.25 per share, up $.05 from its previous guidance.

Big Blue expects to achieve that through a shift to selling more high-value products and the rollout of new mainframes and Power-based systems later this year, among other factors, CEO Samuel Palmisano said in a statement.

Second-quarter software revenue was up 2 percent, or 6 percent when taking into account the recent divestiture of IBM's project lifecycle management business, the company said.

Global services revenue also increased by 2 percent, but the segment contained one notable weak spot: Contract signings in the quarter fell 12 percent to $12.3 billion, an indication that companies could be slowing down on new IT projects amid fresh uncertainties in the global economy, such as the European debt crisis.

However, IBM also signed 15 services pacts during the quarter worth more than $100 million, up from 13 in the previous quarter.

Revenue from IBM's Systems & Technology segment, including its server hardware, increased by 3 percent. Sales of its industry-standard System x servers jumped 30 percent, but revenue from Power systems was down 10 percent, and System z mainframe sales fell 24 percent.

IBM is facing a fresh challenge in hardware from Oracle, which entered the business via its acquisition of Sun Microsystems.

Sales of some hardware products may have fallen because customers are waiting for upcoming product releases, Chief Financial Officer Mark Loughridge said during a conference call.

For example, its next System Z mainframe is "not just a new Z," according to Loughridge. "It's a Z in a 'system of systems' implementation."

IBM has scheduled a press conference on Thursday in New York City, where it's expected to provide details about its next mainframe.

The results were mixed on a geographic basis. Revenue increased by 3 percent in the Americas to $10.2 billion, and by 9 percent in the Asia-Pacific to $5.4 billion, but sales were down 6 percent in Europe, the Middle East and Africa, to $7.4 billion, IBM said.

IBM's shares ended the normal day's trading at $129.79 ahead of the earnings announcement, up slightly from their previous close. They slipped about 4 percent in after-hours trading, however, to $124.40 at the time of this report.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags business issuesIBMsoftwarefinancial resultshardware systems

Featured

Slideshows

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

Hundreds of leaders from the New Zealand IT industry gathered at the Hilton in Auckland on 17 November to celebrate the finest female talent in the Kiwi channel and recognise the winners of the Reseller News Women in ICT Awards (WIICTA) 2020.

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards
Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

The leading female front runners of the New Zealand ICT industry joined together for the annual Reseller News Women in ICT Awards event at the Hilton in Auckland, during which hundreds of guests celebrated 13 outstanding individuals who won awards, chosen from more than 50 finalists representing over 30 organisations.

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards
Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

More than 500 channel leaders gathered in Auckland on 21 October at the ​Reseller News Innovation Awards ​2020 to celebrate the achievements of the New Zealand technology industry's top partners, start-ups, vendors, distributors and individuals.

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners
Show Comments