IBM reported strong quarterly profits on Wednesday that easily surpassed Wall Street’s estimates, as its reach across global markets and its healthy services and software businesses left it unscathed so far by the weakness of the US economy.
The performance was helped by the decline of the dollar. Most of IBM’s business is outside the US, so a falling dollar lifts reported earnings.
But even in the American market, IBM has proved remarkably successful in sidestepping problems, with sales rising 6 percent in the quarter, an improvement from the last quarter last year, when revenue in the US rose only 2 percent.
IBM, the world’s largest technology services company, reported net profits of US$2.32 billion, an increase of 26 percent from the year-earlier quarter when it earned US$1.84 billion.
Its earnings per share were US$1.65, well ahead of the analysts’ consensus, as compiled by Thomson Financial, of US$1.45.
Revenue for the quarter was US$24.5 billion, an 11 percent increase from a year earlier.
PROFITS
In a conference call, Mark Loughridge, IBM’s chief financial officer, said the company was raising its profit projection for the year.
IBM expects profits of at least US$8.50 a share, up from the previous guidance of US$8.25.
In after-hours trading, IBM’s stock price rose to nearly US$124. In regular trading, before the earnings report, the shares closed at US$120.47, up US$3.30 for the day.
IBM resilience in challenging times, Loughridge said in an interview, has been the result of its strategy, which was fine-tuned early last year. He described it as “two separate views of the global market.”
In advanced economies, including the US, where customers were likely to be tightening their belts, IBM tailored its services and software offerings to help customers cut costs, conserve cash and improve productivity. Those kinds of technology investments, Loughridge said, make sense when the economy is weak.
GROWING MARKETS
In fast-growing markets like China, India and Eastern Europe, Loughridge said, IBM has invested heavily to capture opportunities for new business.
IBM’s strong quarterly results were led by its big services business, where revenue rose to US$14.6 billion, up 17 percent, or 9 percent after adjusting for currency gains. Services represent the majority of IBM’s business, and in recent quarters the growth and profit margins have been improving.
“Fundamentally, the thing that is really rocking for IBM now is the services business,” said AM Sacconaghi, an analyst at Sanford C Bernstein & Co.
The software business grew to US$4.8 billion, up 14 percent, or 6 percent without the currency effects. Computer hardware and microprocessor sales fell to US$4.2 billion, but that business picked up toward the end of the quarter when IBM introduced a new version of its mainframe, the z10.
IBM’s total revenue, after excluding a 7 percent lift from currency gains and 1 percent from an acquisition, grew a modest 3 percent.
“It isn’t that IBM is rocketing ahead of everyone, but it is executing so well in this environment,” Sacconaghi said.
Tropical Storm Usagi strengthened to a typhoon yesterday morning and remains on track to brush past southeastern Taiwan from tomorrow to Sunday, the Central Weather Administration (CWA) said yesterday. As of 2pm yesterday, the storm was approximately 950km east-southeast of Oluanpi (鵝鑾鼻), Taiwan proper’s southernmost point, the CWA said. It is expected to enter the Bashi Channel and then turn north, moving into waters southeast of Taiwan, it said. The agency said it could issue a sea warning in the early hours of today and a land warning in the afternoon. As of 2pm yesterday, the storm was moving at
UPDATED FORECAST: The warning covered areas of Pingtung County and Hengchun Peninsula, while a sea warning covering the southern Taiwan Strait was amended The Central Weather Administration (CWA) at 5:30pm yesterday issued a land warning for Typhoon Usagi as the storm approached Taiwan from the south after passing over the Philippines. As of 5pm, Usagi was 420km south-southeast of Oluanpi (鵝鑾鼻), Taiwan proper’s southernmost tip, with an average radius of 150km, the CWA said. The land warning covered areas of Pingtung County and the Hengchun Peninsula (恆春), and came with an amended sea warning, updating a warning issued yesterday morning to cover the southern part of the Taiwan Strait. No local governments had announced any class or office closures as of press time last night. The typhoon
At least 35 people were killed and dozens more injured when a man plowed his car into pedestrians exercising around a sports center in the southern Chinese city of Zhuhai on Monday night. Footage showing bodies lying on the pavement appeared on social media in the hours after the crash, but had vanished by early Tuesday morning, and local police reported only “injuries.” It took officials nearly 24 hours to reveal that dozens had died — in one of the country’s deadliest incidents in years. China heavily monitors social media platforms, where it is common for words and topics deemed
Typhoon Usagi yesterday had weakened into a tropical storm, but a land warning issued by the Central Weather Administration (CWA) was still in effect in four areas in southern Taiwan. As of 5pm yesterday, Tropical Storm Usagi was over waters 120km south-southwest of Oluanpi (鵝鑾鼻), the southernmost tip of Taiwan proper, and was moving north at 9kph, CWA data showed. The storm was expected to veer northeast later yesterday. It had maximum sustained winds of 101kph, with gusts of up to 126kph, the data showed. The CWA urged residents of Kaohsiung, Pingtung County, Taitung County and the Hengchun Peninsula (恆春) to remain alert to
RSS