IBM Quarter Shows Higher Net Income, but No Technology Spending ReboundBy Jessica Davis | Print
IBM saw 14 percent higher net income in its third quarter, but executives stopped short of saying that corporations were returning to spending on technology. Rather, the overall economic environment has improved due to better access to credit.
IBM (NYSE: IBM) posted third quarter net income of $3.2 billion on
total revenues of $23.6 billion. Revenues climbed by 1 percent
sequentially and increased 7 percent from the same period a year ago,
while net income climbed by 14 percent.
CFO Mark Loughridge told analysts during a conference call following the earnings announcement that while he couldn’t comment on a pick up in technology spending overall, he believes that IBM executed well. Further, he said, the overall economic environment seems to be improving.
"What we see more broadly is some stabilization in the economic environment, and one of the key indicators of that stabilization is credit markets have certainly improved on a year-to-year basis," he said.
Total Global Services revenue fell by 7 percent, Global Technology Services segment revenue fell by 4 percent and the Global Business Services segment revenues fell by 11 percent.
Software segment revenues totaled $5.1 billion a 3 percent decrease compared to the same period a year ago. Middleware products saw a revenue increase of 2 percent while OS revenues fell by 12 percent.
Systems and Technology revenues, which includes the company’s servers and mainframes, fell by 12 percent to $3.9 billion, with mainframe revenues suffering a 25 percent decline year over year.
IBM’s Global Financing segment revenues fell 15 percent to $536 million.
IBM says it now expects full-year 2009 of earnings of at least $9.85 per share compared with its previous expectation of $9.70 per share.
Loughridge told analysts that IBM saw improvements in the pipeline going from the third quarter to fourth quarter.
"We think that both our software and our services business should see revenue performance in the fourth quarter similar to what we saw in the third quarter," he said. "…Our hardware business revenue performance should actually improve going from the third quarter to fourth quarter."