IBM’s profits jump 20pc

9 Oct 2008

Big Blue has reported a massive 20pc increase in net income, which it attributes to returns on investments as well as a solid base of recurring revenue.

Revenues for the company’s third quarter rose 5pc to US$25.3bn, and it saw a 22pc increase in diluted earnings of US$1.68 per share.

The company’s gross profit margin in the third quarter was 43.3pc, compared with 41.3pc in the third quarter of 2007. Pre-tax income was US$3.9bn, an increase of 19pc compared with the third quarter of 2007.

“Our results demonstrate that the combination of a steady base of recurring revenue and profits, investments for growth in emerging markets, a range of products and services that deliver value to clients and a strong and flexible financial foundation give IBM a competitive edge in good times and tough times,” said Samuel J Palmisano, IBM chairman, president and chief executive officer.

“We remain confident in our full-year outlook,” he said.

IBM said it continues to expect full-year 2008 earnings per share of at least US$8.75, or year-to-year growth of 22pc

At the end of the third quarter, IBM’s year-to-date free cash flow was approximately US$6.4bn and its cash balance was US$9.8bn.

By John Kennedy

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