IBM's results hampered by slowing hardware sales

System x and Power Systems sales continue to slide, though mainframe sales were strong for IBM

Managing its way nimbly through times of economic sluggishness, IBM reported a 6 percent increase in profit for the third quarter even as its revenue declined.

IBM's third-quarter profit was US$4.0 billion, compared to $3.8 billion in the third quarter of 2012, the company announced Wednesday. Revenue was $23.7 billion, compared to $24.7 billion in the year prior.

"In the third-quarter we continued to expand operating margins and increased earnings per share, but fell short on revenue," said Ginni Rometty, IBM chairman, president and CEO, in a statement.

Most noticeably, hardware sales continued to hamper the company's business.

Revenue from IBM's Systems and Technology segment generated $3.2 billion in revenue, down 17 percent from the third quarter in 2012. System x revenue fell by 18 percent, Power Systems revenue fell by 38 percent and storage system revenue fell by 11 percent.

Rometty characterized IBM's hardware business as "under performing" and said the company is "taking action to improve execution." It plans to put more emphasis on growth markets to reignite revenue growth, Rometty said.

Revenue from the Americas, totalling $10.3 billion, decreased 1 percent from the same quarter a year ago. Revenue from Europe, the Middle East and Africa increased 1 percent to $7.3 billion, while revenue from the Asia-Pacific region declined 15 percent to $5.5 billion.

The services divisions produced middling results for the company. Revenue from the Global Technology Services segment decreased 4 percent to $9.5 billion for the quarter, which ended Sept. 30, while revenue from the Global Business Services segment was flat at $4.6 billion.

Revenue from IBM's software segment climbed modestly to $5.8 billion, up 1 percent from the same quarter a year ago.

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

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Joab Jackson

IDG News Service
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