IBM posted quarterly results showing 9% revenue growth
from last year and slight earnings growth, despite a $320m (£177m)
charge it took during the quarter to settle some claims in a
lawsuit over its pension plan.
IBM's Global Financing revenue dropped 11% from last year's
third quarter, but all of IBM's other business lines showed revenue
growth, contributing to total revenue from continuing operations
for the quarter of $23.4bn. IBM had net income for the quarter of
$1.8bn, up 1% from last year's third quarter.
IBM's Hardware group showed the strongest growth, with revenue
increasing 12% to $7.5bn. Global Services remained IBM's most
lucrative unit, with revenue of $11.4bn, up 10%.
Servers based on processors with the x86 instruction set, such
as Intel's Xeon chip, were the fastest growing component of IBM's
hardware business, with revenues up 26% year-over-year. This growth
was driven in part by strong sales of the company's blade systems,
which grew at more than 140% during the quarter, according to Mark
Loughridge, IBM's senior vice-president and chief financial
officer.
The company's pSeries Unix and iSeries minicomputer product
lines did not fare as well, despite the introduction of new systems
for both families based on IBM's next-generation Power5
microprocessor. The transition of iSeries customers to the new
systems, in particular, was an "issue," with revenue from that
product line dropping 26% from last year's figures, Loughridge
said.
Global revenue from pSeries servers was up only 1% from the
year-ago quarter. Sales were particularly hard hit in Europe, where
revenue from the Unix systems declined 17%. Revenue for pSeries
was up by 9% in the Americas and 8 percent in the Asia-Pacific
region.
The Global Services group suffered a high-profile setback in
September when JPMorgan Chase cancelled the remaining five years of
a seven-year outsourcing deal valued at $5bn, but IBM said at the
time the cancellation would not affect its financials for the
quarter.
IBM said it had signed $10bn in services contracts during the
quarter and now has a backlog of $110bn in contracted future
services. That's a slight decrease from IBM's $118bn backlog at the
end of its second quarter.
IBM signed eight Global Services deals valued at more than $100m
during the quarter, including one deal valued at over $1bn,
Loughridge said.
IBM's Software group increased its revenue to $3.6bn, up 5% from
last year's third quarter, with revenue for IBM's Tivoli
infrastructure software growing 19% and its DB2 database software
growing 15%. Revenue from Lotus, IBM's collaboration and messaging
software, dropped 6%.
"After a difficult end to the second quarter, demand rebounded
in the Americas and Asia, fueled in part by an increase in large
deals," Loughridge said of IBM's software business.
Stacy
Cowley & Robert McMillanwrite for IDG News
Service