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IBM 2012 profits rise 5% in face of falling sales

Karl Flinders

IBM has reaped the benefits of investing in growth markets and reported an increase in profits of 5% – despite a 2% fall in sales – in its 2012 results.

IBM’s wide portfolio of products and services, as well as its huge market reach, made its performance a good measure of the investment businesses are making in IT worldwide.

Total sales were worth $104.5bn in its fiscal year 2012, compared with $106.9bn in 2011, while profits increased 5% to $16.6bn.

IBM said technologies such as business analytics software and cloud computing saw 13% and 80% increases in sales respectively. IBM’s Smarter Planet portfolio of smart technologies made 25% more sales than last year. IBM said sales rose in regions of the world where economic growth is taking place, such as the emerging economies of Brazil, Russia, India and China.

IBM CEO Ginni Rometty said the good performance was driven by these growth markets, analytics, cloud computing and Smarter Planet solutions. This is why profits were up on falling total sales, “which support our continued shift to higher-value businesses,” said Rometty.

"Looking ahead, we continue to invest to deliver innovations for the enterprise in key areas such as big data, mobile solutions, social business and security, while expanding into new markets and reaching new clients.”

Breaking down IBM’s results, the final three months of 2012 showed its software business increased sales while its services and hardware offerings made fewer sales.

IBM’s Global Technology Services sales fell 2% to $10.3bn, but profit increased 5%. Global Business Services revenues fell 3% to $4.7bn with profits unchanged.

Total software sales were worth $7.9bn, representing an increase of 3% on 2011. Sales of IBM's WebSphere, Information Management, Tivoli, Lotus and Rational middleware products rose 5% compared with 2011. WebSphere and Rational software had the biggest increase in sales at 11% and 12% respectively.

Hardware sales from IBM's Systems and Technology division were worth $5.8bn for the quarter. This was 1% lower than the same period last year. Excluding Retail Store Solutions (RSS), revenues rose 4%.


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