Hardware Sales Drive Q3 Growth For IBM


Company reports tepid revenue growth in software and services, but strong sales in emerging markets such as India and China


IBM's long-range strategy relies heavily on software and services. But in the company's third quarter it was sales of server and storage hardware that provided the most growth.

The 10 percent increase in hardware sales (11 percent adjusting for currency fluctuations) outpaced the tepid single-digit sales growth from the company's software and services operations.

IBM reported total revenue of $24.3 billion for the third quarter ended Sept. 30, up 3 percent from $23.6 billion in the third quarter of 2009. Net income reached $3.6 billion, up 12 percent from $3.2 billion one year earlier.

"Systems and Technology had its best growth in six years," said Mark Loughridge, IBM senior vice president and CFO, on a conference call with financial analysts Monday. Sales of Systems and Technology products, including mainframe, server and storage hardware, exceeded $4.3 billion dollars in the quarter compared to $3.9 billion in the same quarter last year.

Revenue from System x servers surged 30 percent in the quarter, IBM said, while sales of System z mainframes were up 15 percent. The latter got a boost early in the quarter when the company debuted its zEnterprise mainframe -- IBM's most powerful computer ever. Storage system sales grew 7 percent and revenue from microelectronics OEM deals increased 28 percent.

 

Next: Slow Growth In Software And Services