After losing Sun to Oracle, IBM earnings up

For the first quarter, IBM earnings were up and narrowly beat analyst expectations

The same day it appears to have lost out on the opportunity to buy Sun Microsystems, IBM reported that revenue for the first quarter of 2009 dropped 11 per cent compared to the same quarter last year and just barely missed analyst expectations.

Total revenue for the quarter was $US21.7 billion, just under the $22.5 billion that analysts polled by Thomson Reuters expected.

But diluted earnings per share were $1.70, a four percent increase over the first quarter of 2008. That beat analyst expectations of $1.66 per share. Net income, however, fell 1 percent to $2.30 billion from $2.32 billion.

On Monday, Oracle announced that it has agreed to buy Sun. The deal follows rumors, never confirmed, that IBM had made an offer for the company that Sun deemed too low. The successful deal now puts Oracle in more direct competition with IBM, since Oracle will have a similar combined hardware and software business model.

IBM is still clearly struggling in the ailing economy. Revenues in its Global Technology Services segment decreased 10 percent compared to the first quarter last year to $8.8 billion and its Global Business Services segment revenue decreased 10 per cent to $4.4 billion.

Revenues from its software segment also declined, dropping 6 percent to $4.5 billion. Revenue from middleware products, which include WebSphere, Tivoli and Lotus, also dropped 5 per cent compared to the same period in 2008, to $3.6 billion.

The company is sticking with its full year 2009 earnings estimate of $9.20 per share and said it is ahead of plan for reaching $10 to $11 per share next year.

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Nancy Gohring

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