IBM services, hardware revenue falls in Q2 while profit grows

IBM system revenue declined and software revenue remained flat

For its most recent financial quarter, IBM experienced a drop-off in revenue, though it was able to maintain profit growth.

For the second quarter, IBM generated $US25.8 billion in revenue, down 3 percent from the second quarter of 2011. The revenue fell short of estimates by analysts, who, according to Thompson Reuters, expected to see $26.28 billion, or only a 1.5 percent decrease.

Despite the dip in revenue, the company was better able to remain buoyant by other financial measures. Net income was $3.9 billion, up from $3.7 billion in the second quarter of 2011. Earnings rose to $3.34 per share, an 11 percent increase from $3.00 per share in the second quarter of 2011. As a result, the company has raised its EPS estimate for the full year to at least $15.10, from a previously estimated $15.

"IBM's business model enabled our strong profit performance in the current environment," said IBM Chief Financial Officer Mark Loughridge in a conference call with financial analysts. He attributed the results to a number of factors. This quarter's results are being compared to an exceptionally strong performance in the second quarter of 2011, he said. "We had a challenging compare," he said. In addition, global currency fluctuations cost IBM about $1 billion in revenue, he added.

Revenue by geographical region varied greatly. Revenue in the Americas was $11.1 billion, down 1 percent from a year earlier. Revenue from Europe, the Middle East and Africa was $7.9 billion, down 9 percent from a year earlier. The Asia-Pacific region proved to be a bright spot, producing $6.3 billion in revenue, up by 2 percent from a year earlier.

The service arms of IBM experienced a slump in revenue, down by 3 percent from a year earlier. Global Technology Services logged $10 billion, a decrease of 2 percent. And Global Business Services posted $4.7 billion in revenue, a dip of 4 percent from a year earlier.

IBM software sales, on the whole, were flat. Software revenue totalled $6.2 billion. Both middleware and operating systems showed no growth in revenue, though Websphere revenue grew by 3 percent from the same time a year earlier. On the other hand, Lotus software revenue decreased 8 percent, and Rational software decreased 7 percent, both year over year.

Hardware sales didn't do so well either. Revenue from the Systems and Technology division totaled $4.3 billion for the quarter, down 9 percent year over year. Total revenue from systems sales and service were down 7 percent from a year earlier. Power Systems revenue was down 7 percent. System x revenue was down 8 percent from a year earlier. System z mainframe server revenue decreased by 11 percent.

In the conference call, Loughridge talked up the growth of some of IBM's technology initiatives. Revenue in business analytics was up 13 percent from a year earlier. Revenue from cloud computing initiatives doubled for the year, when compared with the first half of 2011. And revenue from work in Smarter Planet initiatives was up by 20 percent. IBM did not break out specific revenue numbers for any of these initiatives.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
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

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?