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.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College