IBM's third-quarter growth lighter than expected

IBM's growth slows in major markets, though the company remains enthused on emerging markets

IBM increased both its income and revenue for the third quarter, but the revenue growth came in slightly lower than analysts had predicted, leading to fears that the sluggish economy is hampering IBM's growth.

IBM's net income for the quarter was US$3.8 billion, up 7 percent form the same quarter a year earlier. Revenue was $26.16 billion, an increase of 8 percent, or 3 percent adjusting for currency fluctuations. The figure was below analyst expectations of $26.26 billion, according to a survey by Thomson Reuters. Earnings per share was $3.19 on a GAAP basis, an increase of 13 percent.

IBM CFO Mark Loughridge stressed the importance of emerging markets for the future of the company's growth. "We are leveraging our growth plays while expanding margin," he said in a conference call to discuss the results.

Revenue from growth markets such as China and Brazil was up 19 percent, or 13 percent at constant currency rates, and provided 23 percent of IBM's total revenue.

"Consistent with our model, growth markets, along with our other key growth initiatives, are driving our revenue performance," Loughridge said. During the call, analysts repeatedly asked about sluggish sales growth in the public sector and financial services market, as well as in the major markets overall.

Loughridge urged investors to look at the strong performance in individual units, such as software and service. "I wouldn't look at the overall financial services sector through a major-market lens. Some of the issues we were all reading about, we don't see that in the growth markets," he said.

By sector, IBM's software revenue totalled $5.8 billion, up 13 percent. Total services revenue was $15.1 billion, up by 8 percent. The Systems and Technology group raked in $4.5 billion, or about 4 percent growth. One particularly bright spot was growth in IBM's Power Systems sales, which were up 15 percent.

Other IBM initiatives seem to be bearing fruit. Business analytics revenue is up by 19 percent. Smarter Planet initiatives are up by 50 percent, and cloud revenue year to date is now double what IBM made in that arena for all of fiscal 2010.

Because of this growth, IBM has raised its earnings expectation for fiscal 2011, to at least $13.35 per share from $13.25.

Join the PC World newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesIBMfinancial results

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Joab Jackson

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Armand Abogado

HP OfficeJet 250 Mobile Printer

Wireless printing from my iPhone was also a handy feature, the whole experience was quick and seamless with no setup requirements - accessed through the default iOS printing menu options.

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?