IBM offers beleaguered IT market a ray of hope

21 Jan 2009

IBM’s fourth quarter results out today offered the global IT market some form of respite by revealing a strong performance in an increasingly tough environment.

For the full year 2008 IBM reported record revenues of US$103.6bn – up 5pc on the previous year – and a record pre-tax profit of US$16.7bn, up 18pc year-on-year.

The world’s second-largest technology company reported fourth quarter results that have offered some succour to a global IT industry that, while not in a downturn, fears being over swept by the overall recession.

For the fourth quarter, the company saw a 6pc decline in revenues of US$27bn. However, the company managed to report a profit of US$4.4bn, up 12pc.

“A strong fourth quarter capped an outstanding year,” said IBM’s chief executive Sam Palmisano. “In 2008 IBM performed well in an extremely difficult economic environment.

“Clearly our strategic transformation – migrating to the more profitable segments of the industry, investing in growth regions of the world, and driving productivity through global integration – is continuing to pay dividends.

“With our strong financial position, solid recurring revenue and profit streams and global reach, we are confident about 2009 and, based on our 2008 performance, we are ahead of pace on our roadmap for $10 to $11 per share,” Palmisano added.

IBM reported a 3pc increase in software revenues, a 5pc increase in Global Technology Services, but a 5pc drop in revenues at its Global Business Services divisions.

The IT giant reported overall services signings of US$17.2bn for the quarter, with 24 deals valued at greater than US$100m each.

Strategic outsourcing signings were up 20pc worldwide, with 44pc of the deals taking place in North America.

The company’s total gross profit margin was 47.9pc during the quarter and IBM ended 2008 with US$12.9bn of cash on-hand.

Caption: IBM chief executive Sam Palmisano

By John Kennedy


John Kennedy is a journalist who served as editor of Silicon Republic for 17 years