Steady as she goes for IBM's profits

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Steady as she goes for IBM's profits

Despite the continuing downturn in the economy and the troubles encountered by its rivals, IBM's profits are holding firm.

Just days after Intel announced a big slump in earnings, Big Blue revealed its second quarter profits were up 5% on the same period last year, at $2bn. Revenues remained flat at $21.6bn for the last three months, although within this figure a number of variations are showing.

In both the Americas and EMEA areas, sales were down 1%, while Asia showed a 2% increase. But it wasn't all good news for IBM, with hardware sales down 5%, at $8.7bn, and PC sales being particularly badly hit.

The company claims zSeries mainframe revenues grew strongly, while income from pSeries Unix servers and iSeries mid range machines declined. IBM Global Services continued to show strong growth, on the back of big outsourcing deals in 2001, with revenues up 7% at $8.7bn, matching the sales of hardware.

Lou Gerstner, IBM chairman and CEO, in what may be his last year in charge before retirement in 2002, said whilst he was very pleased with the results, warned there were still tough times ahead. "We also were not immune from some of the problems that affected many of our competitors in the second quarter. We saw ongoing weakness in PCs and hard disk drives, and we continued to be hurt by the negative effects of currency translations. We expect that these factors will continue to work against us in the second half of this year."

Gerstner believes decisions taken during his tenure at the helm means IBM will remain at the front of the IT pack. "Some pundits in the industry seem to think that the piece-part makers who fared so well during the dot-com mania, will return to leadership, simply because the economy will turn around. Nothing could be further from the truth."

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