Big blue back in the black

19 Jul 2005

IBM today reported total revenues of US$22.3bn, down 4pc on the year but up 6pc without the impact of the divested PC business.

Second-quarter income from continuing operations was US$1.85bn, including the non-recurring pre-tax items for incremental restructuring charges of US$1.7bn, offset by a US$1.1bn gain on the sale of the PC business, and a US$775m settlement received from Microsoft.

Without these non-recurring items, income from continuing operations was US$1.82bn as compared to US$1.74bn in the second quarter of 2004.

Total revenues for the second quarter of 2005 of US$22.3bn, which includes US$557m of PC revenue for April 2005, decreased 4pc (6pc, adjusting for currency) from the second quarter of 2004. Excluding the revenue from the divested PC business, second-quarter revenues increased 6pc compared with the second quarter of 2004.

The 6pc revenue growth was driven by growth across all geographies. Revenues from Europe, Middle East and Africa were, however, flat at US$7.5bn (but up 4pc, adjusting for currency and PCs). OEM revenues were US$702m, flat compared with the 2004 second quarter.

Without the PC business, revenues increased in all of IBM’s five industry sectors in the second quarter of 2005 led by double-digit growth in the public and distribution sectors, as well as in sales to SMEs.

Same Palmisano, IBM’s chairman and CEO, commented: “IBM made several strategic and important transitions in the second quarter. We seamlessly moved our PC business to Lenovo, implemented a streamlined management system in Europe and restructured important parts of the company for future growth. I am proud of how the IBM team managed these transitions while, at the same time, delivering a solid quarter.

“IBM returned to form in this quarter. In particular, strategic, high-growth businesses — in business performance transformation services, software and in key industry sectors and emerging markets — were among our best-performing operations, achieving double-digit revenue growth.

“In addition, IBM Business Consulting Services posted an outstanding quarter, with strong revenue growth and a 30pc increase in signings. This performance reinforces our confidence in our business model and in our mission to apply unique, high-value skills and solutions to transform our clients’ businesses.”

By John Kennedy