IBM profits up 13pc to US$2.6bn

20 Apr 2010

Big Blue’s profits for the first quarter of 2010 reached USUS$2.6bn, up 13pc from US$2.3bn last year, on revenues of US$22.9bn, which were up 5pc on last year.

The company, which employs more than 3,000 people in Ireland, attributed the growth to strategic investments in areas like its Smarter Planet solutions business, for which it is creating a further 200 new jobs in Dublin.

“In the first quarter, we drove significantly improved revenue growth rates from the fourth quarter across our businesses and geographies,” IBM CEO Sam Palmisano said.

“We had strong results in strategic investment areas, including growth markets, business analytics and Smarter Planet solutions.

“Looking ahead, we are confident in our ability to grow revenue, and given our mix of higher-value business and productivity we will expand margins, grow profit, cash and EPS, and increase returns to shareholders. Thus, we expect full-year 2010 diluted earnings per share of at least US$11.20,” Palmisano added.

IBM’s second-quarter expectation

The company also said it expects constant-currency revenue growth for IBM and for its total services, software and hardware businesses in the second quarter.

Total Global Services revenues increased 4pc, Global Technology Services segment revenues increased 6pc to US$9.3bn. Global Business Services segment revenues were flat at US$4.4bn.

IBM signed services contracts totalling US$12.3bn, at actual rates, a decrease of 2pc, including 13 contracts greater than US$100m.

Application Management signings decreased 23pc, or about US$700m. Without the impact of this decline, total services signings would have been up 4pc year to year.

Transactional services signings

Signings in transactional services (consulting, integrated technology services and application management systems integration) were US$5.5bn, a decrease of 1pc (6pc, adjusting for currency).

Total outsourcing services (strategic outsourcing and application management outsourcing) signings decreased 3pc to US$6.8bn.

Consulting services signings were up 18pc, with 25pc of signings related to Smarter Planet and Business Analytics. Strategic outsourcing signings increased 6pc.

The estimated services backlog at 31 March was US$134bn at actual rates compared with US$126bn in the first-quarter 2009.

Revenues from the software segment were US$5.0bn, an increase of 11pc (5pc, adjusting for currency) compared with the first quarter of 2009.

Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Lotus and Rational products, were US$2.8bn, an increase of 13pc (8pc, adjusting for currency) versus the first quarter of 2009.

Operating systems revenues of US$499m increased 1pc (down 3pc, adjusting for currency) compared with the prior-year quarter.

By John Kennedy

Photo: IBM CEO Sam Palmisano

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