IBM posted net income of $1.7bn for its second financial
quarter, ending 30 June. Revenue came in at $21.6bn, topping the
$21.4bn forecast by analysts.
IBM's Global Services group accounted for nearly half of the
company's revenue for the quarter, bringing in $10.6bn, a 23%
increase over 2002's $8.7bn second-quarter total. The addition of
PwC Consulting, bought by IBM late last year, helped drive the
growth.
Revenue from IBM's software unit rose to $3.5bn, up 6%,
while revenue from IBM's WebSphere middleware line grew 14%, and
its DB2 database revenue increased 16%.
Revenue from IBM's Lotus information management and
collaboration software unit fell 3% year on year. IBM is
repositioning Lotus' focus away from the mature Notes/Domino
software market and towards new product areas, such as the new
Workplace Messaging low-cost e-mail system IBM recently began
shipping.
Rational, now a unit of IBM's software group, is exceeding
profit expectations, with licence revenue up 17% year on year.
However, IBM's total hardware revenue declined 1% to $6.6bn,
although some areas showed gains. IBM's Systems Group revenue from
servers and storage systems increased 10%. Pricing pressure on IBM
for servers and storage sales is starting to ease on a
quarter-to-quarter basis.
The company's Personal Systems group revenue dropped 3% as PC
sales revenue continued its down trend, and IBM's Technology Group
revenue fell 34%, partially through IBM's divestiture of low-margin
businesses.
Growth in the small- to medium-sized business sector picked up
to 17 percent from the first quarter. Continuing that momentum will
be a key priority for IBM in the second half of the year. The
public sector was another strong market for IBM, driven by
government spending.
Sales in the retail and financial services markets eased up
during the quarter. In the financial services sector, customers
have delayed purchases as they await encryption features scheduled
to be added by the end of the third quarter to IBM's eServer
zSeries 990, codenamed T-Rex.
Stacy Cowley writes for IDG News Service