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.
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
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
with our model, growth markets, along with our other key growth initiatives,
are driving our revenue performance," Mark Loughridge, IBM's senior vice
president and chief financial officer of finance and enterprise transformation,
said during an Oct. 17 call with analysts.
the company's growth markets increased 19 percent. Revenue in the BRIC
countries-Brazil, Russia, India and China-increased 17 percent. Growth markets
revenue represents 23 percent of IBM's total geographic revenue for the third
"We did well
in the BRIC countries, but two-thirds of our growth market business lies
outside of the BRIC countries," Loughridge said. "We're seeing significant
growth in 40 growth-market countries, not just these BRIC countries. We have 36
other countries driving revenue" as part of IBM's growth markets strategy.
Loughridge said revenue from growth markets has been increasing several points
more-and faster-than IBM's major markets over the last few years. What's more, he
said, "The growth markets have a lot of margin capability." For instance, big
banks in Africa and Asia are looking to rebuild infrastructure, which means new
mainframe deals, he said, adding that the continued telecom boom in Asia represents
a key opportunity.
expanding potential there," Loughridge said of the growth markets. "It's not
just a matter of capitalizing on expanding growth into these new markets."
third-quarter revenue was $10.9 billion, an increase of 7 percent from the comparable
2010 period. Revenue from Europe/Middle East/Africa was $8 billion, up 9
percent. Asia-Pacific revenue increased 10 percent to $6.5 billion.
revenue from the software segment totaled $5.8 billion, an increase of 13
percent. Revenue from IBM's key middleware products, which include its WebSphere,
information management, Tivoli, Lotus and Rational products, was $3.6 billion,
an increase of 17 percent, versus the third quarter of 2010. Operating systems
revenue of $598 million increased 9 percent from the prior-year quarter.
revenue from the WebSphere family of software products increased 52 percent
year over year. Information management software revenue increased 12 percent.
Revenue from Tivoli software increased 8 percent. Revenue from Lotus software
increased 6 percent, and Rational software increased 7 percent.
information management space, IBM's Netezza grew 36 percent over last year.
"Since its introduction in 2009, the Netezza appliance has won over 80 percent
of the head-to-head proof of concepts against the competition," Loughridge
IBM's future outlook in software, Loughridge said in his prepared remarks:
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.
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.
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."
also said the dip in mainframe sales was expected as part of the "typical
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
Darryl K. Taft covers the development tools and developer-related issues beat from his office in Baltimore. He has more than 10 years of experience in the business and is always looking for the next scoop. Taft is a member of the Association for Computing Machinery (ACM) and was named 'one of the most active middleware reporters in the world' by The Middleware Co. He also has his own card in the 'Who's Who in Enterprise Java' deck.