Q2 sees revenue and profit slide for IBM

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Q2 sees revenue and profit slide for IBM

IBM has reported a year-on-year fall in revenue for its second fiscal quarter as it continues to suffer from a weak overall economy and reorganises its business units.

IBM posted revenue of $20bn (£13bn) in second-quarter revenue, a 7% decrease from the same quarter in 2001. The company generated $56m (£36m) in net income compared with $2bn (£1.3bn) in net income in last year's second quarter, including charges, the company said.

Diluted earnings per share for IBM came in at $0.03, including costs associated with workforce reductions, a realigning of its Microelectronics Division and the agreement to sell its hard disk drive business to Hitachi. Excluding these charges, IBM posted $0.84 earnings per share. IBM posted earnings per share of $1.15 in the same quarter last year.

The consensus estimate for IBM by analysts polled at Thomson Financial/First Call was for $0.83 earnings per share, excluding charges, but including IBM's hard disk drive business.

The company cited growth in its middleware software business as a high point in the quarter. In addition, IBM claimed to hold even with the competition in its server and storage businesses.

Excluding IBM's hard disk drive business, the company posted revenue of $19.7bn for the quarter ended 30 June. IBM marked the hard disk drive business as a discontinued operation in its earnings statement and said that segment showed a loss of $389m or $0.22 per diluted share for the quarter.

IBM's earnings have been under scrutiny by the analyst community after it sold its hard disk drive unit to Hitachi in June. IBM had lost $515m over the last five quarters from poor hard disk drive sales and will take charges in coming quarters as part of the deal. Still, the company did not alter its per share earnings targets for coming quarters following these announcements.

Like other sever and storage vendors, IBM has suffered from slow hardware sales.

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