IBM's 3Q Profit Rises 7 Percent
IBM's third-quarter 2011 profit rose 7 percent as the company performed well in its growth markets, services and software segments?ö?ç??particularly business analytics and the cloud.IBM saw its third-quarter revenue rise 8 percent to $26.2 billion, largely based on the company's performance in growth markets, software and services. Moreover, IBM reported that net income in this interval grew 7 percent to $3.8 billion from $3.6 billion. "In the third quarter, we drove revenue growth, margin expansion and increased earnings as a result of our innovation-based strategy and continued investment in growth initiatives," Samuel J. Palmisano, IBM chairman, president and CEO, said in a statement. "Growth markets delivered outstanding revenue performance across software, hardware and services, and contributed to the company's expanded margins. We also achieved strong results in Smarter Planet, business analytics and cloud."
IBM's third-quarter results were led by software, which saw revenue growth of 13 percent. Services revenue grew 9 percent, and IBM's Systems and Technology Group's revenue rose 4 percent. In addition, IBM experienced solid gains in its growth initiatives. Growth markets revenue was up 19 percent; business analytics revenue was also up 19 percent; IBM Smarter Planet revenue rose 50 percent; and cloud revenue year-to-date is already double IBM's cloud revenue for all of 2010.
Going forward, we continue to expand our software business both organically and through acquisitions, with a focus on higher growth segments such as Smarter Commerce, business analytics and security. We closed on the acquisition of i2 earlier this month. i2 helps customers in the public and private sectors address crime, fraud and security threats. We expect to close on the acquisition of Algorithmics and Q1 Labs later this year. Algorithmics expands IBM's capabilities in the financial services industry by helping clients quantify, manage and optimize their risk exposure across a range of financial risk domains. Q1 Labs helps clients more intelligently secure their enterprises by applying analytics to correlate information from key security domains and creating security dashboards for their organizations.Revenue from the Systems and Technology segment totaled $4.5 billion for the quarter, up 4 percent from the third quarter of 2010. Systems revenue increased 6 percent. Revenue from Power Systems increased 15 percent, compared with the 2010 period. Revenue from System x increased 1 percent. Revenue from System z mainframe server products decreased 5 percent from the year-ago period. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), decreased 11 percent. And revenue from System Storage increased 8 percent. "Hardware profit growth of 8 percent was led by Power Systems, where we had outstanding revenue growth and margin performance," Loughridge said. "We're continuing to drive competitive displacements and extend our share gains in Unix." Loughridge also said the dip in mainframe sales was expected as part of the "typical mainframe cycle." "System z revenue declined 5 percent, and MIPS were down 11 percent as we wrapped on the successful launch of our zEnterprise 196 in the third quarter of last year," Loughridge said. "Since the z196 started shipping a year ago, we have added over 80 new System z customers, with more than 30 percent of these in the growth markets."