IBM profits increase despite tech sales slump

16 Oct 2009

A slump in tech sales hit IBM’s third-quarter performance with revenue of $23.6 billion, up 1pc quarter-to-quarter; but down 7pc on last year. Despite this, profits soared 14pc.

Third-quarter 2009 diluted earnings of US$2.40 per share compared with diluted earnings of US$2.04 per share in the third quarter of 2008, an increase of 18pc.

Third-quarter net income was US$3.2 billion compared with US$2.8 billion in the third quarter of 2008, an increase of 14pc.

“Our long-term strategic shift to higher-value businesses again enabled us to deliver outstanding margin, earnings and cash flow growth in the third quarter,” said Sam Palmisano, IBM chairman, president and chief executive officer.

“We also saw improved revenue trends in our business and share gains in software and hardware.

“We continued to invest for growth in areas where clients see potential for value creation, including Smarter Planet solutions, cloud computing and advanced business analytics. We are optimistic about 2009 as we again raise our full-year expectations and we remain well ahead of pace for our 2010 roadmap of US$10 to US$11 per share.”

IBM now expects full-year 2009 earnings of at least US$9.85 per share compared with its previous expectation of at least US$9.70 per share.

The company said it expects full-year 2009 pre-tax income for both its Software and Services segments to grow at double-digit rates and reach about US$8 billion.

By John Kennedy

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