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IBM chip sales and margins static

Existing operations make up for divested ones

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IBM Microelectronics performed as well as expected during its first quarter of fiscal 2003, showing flat revenue growth over the same period last year.

For the three months to 31 March, IBM's chip operation notched up sales of $5.8 billion, just a single percentage point below last year's $5.9 billion. It said the decrease was largely due to having quit certain "non-strategic businesses" over the last year. That suggests positive growth for the remaining operations, replacing all but one per cent of the revenue lost by exiting said non-strategic businesses.

IBM didn't say what all that means in terms of the unit's profitability (or otherwise), but it did note that gross margins increased year-on-year by a single percentage point to 26.6 per cent.

For the company as a whole, sales were up 11 per cent year-on-year, from $18 billion to $20.1 billion, leading to a increase in profitability of 16 per cent to £1.38 billion ($0.8 a share). ®

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