Feeds

IBM puts future profits in the bag

2009 and 2010 a done deal, thanks

Top three mobile application threats

Perfect timing

Palmisano then added that it's a "perfect time to prudently invest," which IBM has been doing, and then seemed to diss IBM's own near-acquisition of Sun Microsystems and HP's actual acquisition of Electronic Data Systems, adding that IBM doesn't "do crazy deals just because they are available."

He mumbled something about services to try to cover his tracks about almost talking explicitly about the Sun deal, and then talked a while about the business-analytics business that IBM expects to be bigger than the ERP software racket within the next five years.

He then came back to his recurring theme about how IBM is a mature company with mature management, trying to get Wall Street to see that Big Blue can and will make profits in this tough economic climate.

"We are not like the other companies in the IT industry," Palmisano said. "We are not crazy kids. We don't throw numbers out just to throw numbers out."

He joked that IBM had exited the Indian IT market more times than any other companies have entered it, and that Big Blue doesn't have to enter markets so much as emphasize them.

He also trotted out Big Blue's familiar "annuity-like revenue stream" differentiator - which a cynical person might call z/OS heroin and OS/400 crack - to get across the message about just how addictive legacy applications really are for the Global 20000. More than two-thirds of IBM's quarterly revenue stream coming from monthly software and services fees. "We don't have the dependency on transactional deals at the end of the quarter that others have," he said.

IBM also does not have as much dependency in terms of revenues and, more importantly, profits when it comes to hardware.

IPalmisano showed in his presentation how in 2000 - well after IBM was in its transition to a services and software company - hardware accounted for 24 per cent of pretax income, software accounted for 25 per cent, services for 40 per cent, and financing 10 per cent. IBM's overall pre-tax margins were at 12 per cent and pre-tax income came in at $10.2bn (£6.7bn).

Fast-forward to 2008. Pre-tax margins were 16.1 per cent (thanks in large part to shedding commodity hardware businesses) and pre-tax income was $16.7bn (£11bn). And in 2008, hardware only contributed 9 per cent of pre-tax income, compared to 40 per cent for software, 42 per cent for services, and 9 per cent for financing.

And given that IBM has a lock on mainframes and is the only software distributor for them (for the most part), has the largest market share in the Unix space, is by far the largest and most complex services organization, and has a software business that is basically a money printing machine thanks to the mainframe, AIX, and i bases, you can understand why IBM has said repeatedly in the past several months that it can post at least $9.20 (£6.07) in earnings per share in 2009 and at least $10 (£6.60) per share in 2010.

"We are comfortable with our model," Palmisano declared. "We are not exuberant. We are not over-caffeinated."

3 Big data security analytics techniques

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Record labels sue Pandora over vintage song royalties
Companies want payout on recordings made before 1972
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Number crunching suggests Yahoo! US is worth less than nothing
China and Japan holdings worth more than entire company
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.