IBM's European business declined 5% owing to currency fluctuations and spending cuts, according to the company's Q2 2010 results. Its mainframe business also shrunk significantly.
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Revenues from Europe, Middle East and Africa were $7.4bn, down 6% on last year.
Revenues from IBM's System z mainframe server products decreased 24% compared with the year-ago period. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), decreased 14%.
During the quarter IBM signed services contracts totalling $12.3bn, a decrease of 12%.
In the quarter, 15 services contracts worth more than $100m were signed compared with 13 contracts last quarter.
Overall, second-quarter net income was $3.4bn compared with $3.1bn in the second quarter of 2009, an increase of 9%. Total revenues for the second quarter of 2010 was $23.7bn, an increase of 2% from the second quarter of 2009.
Samuel J Palmisano, IBM chairman, president and chief executive officer, said, "With the benefit of our strategic growth investments, our mix of higher-value business and the introduction of new System z and Power Systems, we are confident of our ability in the second half of the year to continue our strong business performance, grow profit and drive shareholder returns."