MS/DOJ: MS witness admits ties to software giant

IBM today reported "disappointing" earnings for the first quarter of its fiscal year, saying they fell by 31 percent compared with the same period a year ago. The company reported diluted earnings of 68 cents per share, compared with the 98 cents per share it reported in the first quarter of 2001.

Net income was US$1.19 billion, off 32 percent from the $1.75 billion the company reported a year ago. Revenues for the period totaled $18.6 billion, a decrease of 12 percent compared with the first quarter of 2001.

The results, "while disappointing, were largely the result of the continued weak global business environment. As we indicated in our announcement last week, customers in every part of the world deferred technology purchases in the first quarter," said IBM president and CEO Samuel J. Palmisano in a statement released after the close of financial markets.

"These widespread deferrals hurt us across every one of our major business segments," he said. "While no one can predict the timing of a recovery, we remain optimistic that business conditions will improve later this year. Our customers are telling us that information technology remains critical to the success of their businesses. ... We remain confident about the fundamental strength of our business and about our prospects for the future."

The company reported a big drop in revenue from hardware sales, which were off 25 percent from a year ago, a decrease brought on by deferred IT spending at many companies. Revenues from IBM's zSeries mainframes declined, as did revenues from its pSeries, iSeries and storage products.

IBM officials blamed price pressures, product transitions and deferred purchases for the drop. PC revenues also fell, "reflecting continued weak industry demand," the company said.

Software revenues fell 1 percent to $2.9 billion, but revenue from middleware products -- which account for 80 percent of IBM's software revenues -- grew 6 percent, the company said.

Just last week, IBM had warned that a slowdown in customer spending for the quarter ended March 31 meant its earnings would come in below expectations.

Meanwhile, Apple Computer Inc.'s earnings for its second quarter ended March 30 met financial analysts' expectations, and the company posted a net profit of $40 million, or 11 cents per diluted share, for the quarter. That compared to a net profit of $43 million, or 12 cents per diluted share a year ago.

Revenues totaled $1.5 billion, up 4 percent from the year-ago quarter, and gross margins were 27.4 percent, compared to 26.9 percent a year ago. International sales accounted for 45 percent of the company's revenues, the company said.

In a statement, Apple touted the popularity of its redesigned iMac personal computer and said overall shipments of its computers were up 8 percent over a year ago, to 813,000.

"We've experienced incredible demand for the new flat-screen iMac and shipped 220,000 this quarter," said Apple CEO Steve Jobs. "Feedback from customers using them has been off the charts -- we've clearly got a winner here.

"Looking forward, we're making great progress on our transition to Mac OS X, we have some remarkable new products in development, and we plan to open an additional 20 Apple retail stores by the end of this calendar year," Jobs said.

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