IBM Beats 3Q Estimates, Sees Market Stabilization

Loughridge said during the company's third-quarter earnings call that credit markets have improved compared to last year, but it's still difficult to predict how spending will come back. "Last year, we were talking about credit. We're through those kinds of questions [now]. With that improvement, the environment has stabilized," he said.

IBM reported an earnings increase of 14 percent to $3.21 billion, or $2.40 per diluted share, compared to net income of $2.82 billion, or $2.04 per share, in the year-ago quarter.

Revenue in the quarter fell 7 percent to $23.57 billion, from $25.30 billion for the same quarter last year, but it increased 1 percent compared to the second quarter.

With earnings growing faster than sales, it appears that IBM has adapted its business to the current economic climate. IBM beat analysts' expectations of $2.38 earnings per share on $23.40 billion in sales.

id
unit-1659132512259
type
Sponsored post

During the call, Loughridge said IBM was increasing its full-year earnings guidance for the third time this year, to $9.85 per share, which is up 15 cents from July.

In the Americas, IBM reported $9.9 billion in sales, a 5 percent decrease from the same quarter last year. Revenue for Europe, Middle East and Africa was $7.8 billion, down 12 percent. Asia-Pacific sales were flat to $5.2 billion.

Software sales fell 3 percent to $5.1 billion compared to the same period last year, a performance that was helped by a 2 percent growth in key middleware lines, including WebSphere, Information Management, Tivoli, Lotus and Rational products, Loughridge said.

Specifically, WebSphere sales grew 14 percent year-over-year and IBM gained 3 percent market share during those periods. Meanwhile, Tivoli sales were up 5 percent, Lotus sales were down 9 percent, Rational sales were up 2 percent and Information Management sales were flat, Loughridge said.

Systems revenue fell 13 percent, due in large part to a 26-percent decline in System z mainframe server products. System x servers sales increased 1 percent, while systems storage revenue fell 13 percent and retail store solutions sales decreased 15 percent. IBM said it gained market share in System p, System x and disk and tape storage during the third quarter.

Global Technology Services revenue fell 4 percent in the quarter to $9.4 billion. Global Business Services sales declined 11 percent to $4.3 billion. Finally, IBM Global Financing sales fell 15 percent to $536 million.