Feeds

Services hold IBM up in Q2

Currency conversion

  • alert
  • submit to reddit

Choosing a cloud hosting partner with confidence

IBM's services and software businesses carried it higher in the second quarter, while hardware revenue continued to wane.

IBM brought in $21.6 billion in revenue - a 10 percent rise from the $19.7 billion reported in the same quarter a year ago. Income hit $1.7 billion in this most recent quarter versus $445 million in last year's Q2. IBM, however, took a $1.4 billion charge in 2002 as a result of layoff costs and restructuring costs associated with the sale of its hard drive business.

IBM's earnings statements are always an adventure, as the company has more divisions, charges and various other accounting moves than most. In this year's second quarter, it should be noted that currency fluctuations - notably a weak dollar - helped IBM across the board.

Global Services revenue surged 23 percent to $10.6 billion in the second quarter. IBM signed $10.7 billion in services contracts during the quarter and benefitted from the addition of PwC Consulting.

Software revenue also increased 6 percent during the quarter to $3.5 billion. Middleware sales, which include the DB2 database, grew 7 percent to $2.7 billion and operating systems revenue increased 5 percent to $589 million. The results from Rational - acquired in the first quarter - are included in these results.

In constant currency, total software revenue actually fell 2 percent.

"You should expect continued improvement in software in the third quarter," said John Joyce, chief financial officer at IBM, during a conference call.

Total hardware revenue fell 1 percent - 6 percent in constant currency - to $6.6 billion. Sales of Intel-based and Power-based servers increased 10 percent, while the zSeries mainframe revenue fell 7 percent. Joyce said users could expect new encryption software in the third quarter and doubled channel capacity in the fourth quarter for the new TREX mainframe. IBM's CFO traced slow mainframe sales to the lack of the encryption code.

"The security feature is very important to the banking industry," Joyce said. "They were not going to buy the new TREX product until we had that. It did impact us in the quarter."

IBM noted that storage sales improved in the quarter with growth coming from its large, enterprise gear.

IBM has put a lot of investment in its chip fabrication business and picked up some nice wins such as Apple Computer with the G5, but officials say things are not progressing as hoped.

"The foundry business is the area where are not seeing the ramps we would like," Joyce said. "They are not ordering at a rate and pace that we had assumed."

The Personal Systems Group saw revenue fall 3 percent - 8 percent in constant currency - to $2.7 billion. Slow PC sales were the main factor in the decline, IBM said.

"These are good, solid results," Joyce said. "It is a tough market out there."

Investors appeared a tad less impressed during the after-hours trading session. Shares of IBM were down 2 percent, at the time of this report. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
'Kim Kardashian snaps naked selfies with a BLACKBERRY'. *Twitterati gasps*
More alleged private, nude celeb pics appear online
Wanna keep your data for 1,000 YEARS? No? Hard luck, HDS wants you to anyway
Combine Blu-ray and M-DISC and you get this monster
US boffins demo 'twisted radio' mux
OAM takes wireless signals to 32 Gbps
Google+ GOING, GOING ... ? Newbie Gmailers no longer forced into mandatory ID slurp
Mountain View distances itself from lame 'network thingy'
EMC, HP blockbuster 'merger' shocker comes a cropper
Stand down, FTC... you can put your feet up for a bit
Apple flops out 2FA for iCloud in bid to stop future nude selfie leaks
Millions of 4chan users howl with laughter as Cupertino slams stable door
Students playing with impressive racks? Yes, it's cluster comp time
The most comprehensive coverage the world has ever seen. Ever
Run little spreadsheet, run! IBM's Watson is coming to gobble you up
Big Blue's big super's big appetite for big data in big clouds for big analytics
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.