IBM saw a net income boost of 12 percent to $3.6 billion for its third quarter of 2010, based on increased systems and technology, services and growth market sales.
IBM announced third-quarter 2010 net
income of $3.6 billion, compared with $3.2 billion for the third quarter of
2009, an increase of 12 percent driven by significant increases in systems and
technology sales and IBM services as well as
a boost in growth markets.
Total revenues for the third quarter of 2010 of $24.3 billion increased 3
percent from the third quarter of 2009.
"Systems and Technology had its best revenue in six years," said
Mark Loughridge, IBM's senior vice president
and chief financial officer for finance and transformation, during IBM's
earnings call with analysts. "We delivered another good quarter."
Revenues from IBM's Systems and
Technology segment totaled $4.3 billion for the quarter, up 10 percent from the
third quarter of 2009. Systems and Technology pretax income was $327 million,
an increase of 46 percent. Systems revenues increased 8 percent. Revenues from
System x increased 30 percent. Revenues from System z mainframe server products
increased 15 percent compared with the year-ago period. Total delivery of
System z computing power, as measured in MIPS
(millions of instructions per second), increased 54 percent. Revenues from
Power Systems decreased 13 percent compared with the 2009 period. Revenues from
System Storage increased 7 percent, and revenues from Retail Store Solutions
were flat year over year. Revenues from Microelectronics OEM increased 28
percent, IBM reported.
"In the third quarter we grew revenue in our hardware, software and
services businesses, expanded margins and again increased earnings per share at
double digits," said Samuel J. Palmisano, IBM
chairman, president and chief executive officer, in a statement. "We
achieved excellent performance in our growth markets unit, reflecting sustained
investments through the downturn and the continued strength of the
infrastructure build-out in these countries.
"Looking ahead, we are uniquely positioned in the enterprise, investing
in high value segments like business analytics, advanced systems and smarter
planet solutions. As a result, we are confident we can deliver strong business
performance to grow profit, return value to our shareholders and to achieve
full-year 2010 diluted earnings per share of at least $11.40."
From a geographic perspective, the Americas'
third-quarter revenues were $10.2 billion, an increase of 3 percent from the
2009 period. Revenues from Europe/Middle East/Africa were $7.4 billion, down 6
percent. Asia-Pacific revenues increased 14 percent to $5.9 billion. OEM
revenues were $806 million, up 27 percent compared with the 2009 third quarter.
Revenues from the company's growth markets organization increased 16 percent
and represented 21 percent of IBM's total
geographic revenue in the quarter. Revenues in the BRIC countries-Brazil,
and China-increased 29 percent, and 28 other growth market countries also had
double-digit revenue growth, adjusting for currency. Growth market revenues for
both servers and storage increased by more than 20 percent in the quarter. IBM
now has 103 sales offices in the growth market countries after opening 40
offices in 2010, the company said.
Meanwhile, IBM's total Global Services
revenues increased 2 percent. Global Technology Services segment revenues
increased 1 percent to $9.5 billion. And IBM
Global Business Services segment revenues were up 5 percent at $4.6 billion.
Revenues from the Software segment were $5.2 billion, an increase of 1
percent. However, the segment showed a growth rate of 6 percent excluding the
first-quarter divestiture of the Product Lifecycle Management (PLM) operations,
compared with the third quarter of 2009. Revenues from IBM's
key middleware products, which include WebSphere, Information Management, Tivoli,
Lotus and Rational products, were $3.1 billion, an increase of 7 percent versus
the third quarter of 2009. Operating systems revenues of $550 million increased
6 percent compared with the prior-year quarter.
Loughridge said revenues from IBM's
WebSphere family of software products increased 14 percent year over year.
Information Management software revenues increased 5 percent. Revenues from Tivoli
software increased 9 percent. And revenues from Lotus software and Rational
software were flat.
Meanwhile, revenues from the company's business analytics operations across
services and software segments increased 14 percent. "And with the
acquisitions of Sterling Commerce, Coremetrics and Unica we expect to see
continued growth in this segment," Loughridge said.
Overall, in the third quarter, IBM made
11 acquisitions for a total of $11 billion, Loughridge said, noting that it is
part of IBM's aggressive strategy to
continue to grow its portfolio, particularly in the areas of analytics, cloud
computing and Smarter Planet activities.