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PwC boosts IBM's coffers

Services up, hardware down

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IBM's massive services business carried the company in its first fiscal quarter of 2003, off-setting losses in hardware sales.

IBM generated $1.4 billion in net earnings for the quarter, which is an 8 percent increase over the same period a year ago. This gain came on $20.1 billion in revenue -- an 11 percent rise year-on-year.

Global Services received a boost from the PwC acquisition and pulled in $10.2 billion in revenue, a 24 percent jump over the first quarter of 2002.

IBM's hardware business did not perform as well. Total hardware revenues fell 1 percent to $5.8 billion even though Intel and Unix server sales were up. The trusty-old mainframe business struggled and microelectronics revenue fell.

The software business pulled its weight in the quarter with revenues increasing 8 percent to $3.1 billion. WebSphere and DB2 were the big sellers.

Sales in the Americas were up 5 percent to $8.6 billion, EMEA rose 23 percent to $6.3 billion and AsiaPac rose 14 percent to $4.5 billion.

IBM has been on a buying binge with the PwC deal and the Rational Software acquisition, which was completed at the end of February. The plan is to ship software engineers and the services team with every piece of hardware leaving Big Blue's warehouse. This package keeps server and storage prices competitive while letting IBM take advantage of its real money makers.

This strategy looks much more successful in 2003 than it did last year when IBM's saw its first quarter revenue tumble 12 percent. In Q1 2002, the vaunted services business lost ground and the hardware business hemorrhaged cash.

But IBM put about 15,000 layoffs behind it since then, and is operating a leaner ship.

The Armonk brass expects the company to pull in $88 billion for the entire year. ®

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