IBM 3Q Earnings Gain Tempered By Pension Settlement

$320 million pension settlement

Earnings in the quarter ended Sept. 30 were $1.8 billion, a 1 percent gain from roughly $1.79 billion a year ago. Without the pension settlement charge, IBM's third-quarter net income would have been $2 billion, a 12 percent gain, said Mark Loughridge, senior vice president and CFO at IBM.

The Armonk, N.Y.-based company's earnings per share came in at $1.06 for the third quarter but would have been $1.17 without the one-time charge, which was a partial settlement of legal claims against IBM's pension plan, Loughridge said. Including the charge, IBM's earnings per share rose 4 percent year over year, but excluding the impact of the settlement, the company's earnings per share would have risen 15 percent, he said.

On the sales side, IBM reported third-quarter revenue of $23.4 billion, up 9 percent from a year earlier. Software revenue came in at $3.6 billion, a 5 percent year-over-year gain. The strong software performance was driven in part by product announcements related to Rational and WebSphere, as well as technology acquisitions Cyanea, Venetica and Systemcorp, Loughridge said.

"IBM saw strength in the strategic [software] products and a decline in the legacy products," he said about third-quarter software results.

id
unit-1659132512259
type
Sponsored post

IBM is optimistic about its future as a PC vendor, Loughridge said, and the company aims to gain market share from competitors over the next few quarters. About $54 million of IBM's third-quarter 2004 profit came from its personal systems group, the vendor's PC and notebook arm, Loughridge said. IBM's gross profit for the third quarter was $8.64 billion, a 10.7 percent year-over-year increase, which was realized at a 36.9 percent gross margin.