IBM Wraps Up 2012 With Flat Sales, Higher Profits

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IBM's Systems and Technology group reported revenue of $5.8 billion in the quarter, down 1 percent year-over-year as reported, but up 4 percent when factoring out the company's retail store systems line that was sold to Toshiba in August for $850 million.

A recently launched upgrade for the company's System z mainframe computers boosted that product line's sales by a whopping 56 percent year-over-year. But, Power Systems sales were down 19 percent in the quarter, storage systems dropped 5 percent and System x sales were down 2 percent.

IBM has not reported growth in its Systems and Technology operations since the third quarter of 2011 when hardware sales grew 4 percent. But, the rate of decline has slowed: Hardware sales plunged 13 percent in this year's third quarter.

In the quarter, IBM had 350 "competitive displacements" -- situations where competitors' hardware products were swapped out in favor of IBM products. Loughridge said those deals were worth about $355 million with those competitive wins about evenly split against rivals Oracle and Hewlett-Packard.

IBM's Global Technology Services operations generated $10.3 billion in revenue in the fourth quarter, down less than 1 percent from the same period one year earlier. Revenue from Global Business Services was $4.7 billion, down more than 3 percent year-over-year. Loughridge said IBM is retooling GBS to focus on "higher value work" with business analytics, smarter planet and cloud services now accounting for one-third of the GBS business.


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