IBM sees first-quarter profit and sales growth

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IBM sees first-quarter profit and sales growth

IBM reported on net income and revenue growth in its first quarter of 2004, driven by sales increases worldwide and in the small- and mid-sized business market.

IBM's revenue rose to $22.2bn (£12.4bn), up 11% from 2003's first quarter, and net income reached $1.6bn, up 16%.

IBM's Global Services unit brought in $11.1bn, more than the company's hardware and software groups combined. IBM's profit margin there dropped, however, as it faced expensive infrastructure investments related to customer projects and weakness in its consulting and systems integration business.

Those services remain dependent on an economic upturn, but IBM's outsourcing and maintenance businesses - including hosting, maintenance and recovery services - remain strong, said chief financial officer John Joyce.

In the US, IBM's revenue climbed 6% year on year, while revenue increased 16% in Asia-Pacific and 15% in the combined Europe/Middle East/Africa region.

Adjustments to IBM's employee roster cost the company $163m, $85m more than such adjustments cost in last year's first quarter. IBM had 319,300 employees at the end of 2003.

IBM's combined systems and technology division showed a year-on-year revenue growth of 14%. Joyce singled out the storage and Unix hardware markets as among the industry's most price-sensitive.

When IBM slowed its discounting of zSeries mainframe servers last year, the company saw a corresponding slowdown in demand. Now that the company has resumed "more aggressive" pricing, sales are back up, he said.

IBM's microchip unit - included in the 'technology' part of its Systems and Technology Group - continued its pattern of losing money but is expected to be profitable in 2004 through improving demands and yield.

IBM's Personal Systems Group, including its laptop and desktop computers, showed 18% revenue growth but had an $11m loss. That loss is narrower than last year's first-quarter shortfall of $69m.

Stacey Cowley writes for IDG News Service 


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