IBM reported Q4 2011 earnings of 29.5 billion, showing a 4 percent increase in profits -- driven largely by software and services -- despite a dip in mainframe sales.
IBM continued on its course of steady
growth, reporting fourth-quarter 2011 net income of $5.3 billion for a 4
percent increase over the same period a year ago.
Mark Loughridge, IBM's chief financial
officer, said software and services led the way in the fourth quarter, with
software revenue up 9 percent and both Global Technology Services and Global
Business Services up 3 percent.
Total revenue for the fourth quarter of
2011 was $29.5 billion, an increase of 2 percent.
Loughridge said IBM focused heavily on
its target areas of Smarter Planet, business analytics, cloud computing and its
Growth markets Unit. "The construct behind these areas is that one-half of
that revenue is from software," he said. "We get more than half of
the revenue from these segments from software.
"Looking at the fourth quarter by
segment, we continued to build our momentum in software, our performance
reflecting both strong demand for our offerings and leadership sales execution,"
Loughridge said. "Our software revenue was up 9 percent, driven by
aggressive growth in our focus areas like Smarter Commerce, business analytics
and storage solutions. Our software profit was up 12 percent."
"We had a strong fourth-quarter
performance, capping a year of record earnings per share, revenue, profit and
free cash flow," said Ginni Rometty, IBM president and CEO, in a
statement. "We delivered outstanding results in all four of our strategic
initiatives for the quarter and the year, as we continued to realize the
benefit of our long-term investments in growth markets, business analytics,
Smarter Planet solutions and cloud. We are well on track toward our long-term
roadmap for operating earnings per share of at least $20 in 2015.""
Revenue from IBM's growth markets
increased 7 percent. Revenue in the BRIC countries-Brazil, Russia, India and
China-increased 10 percent.
"Our growth markets outpaced the
major markets by 8 points of revenue growth," Loughridge said. "The
BRICs had another good quarter; combined they were up 11 percent and with
nearly two-thirds of our growth markets business outside the BRICs, all
together, we had double-digit growth in 40 growth market countries. So our
performance was broad-based. We're continuing to expand into new countries and
territories, to build out IT infrastructures in support of economic growth and
to take a leadership position in key industries. This year, to drive market
expansion, we opened 92 new branches and we added over 1,500 new sales reps. We
gained 4 points of share this quarter and 4 points for the year."
Moreover, "In 2011, our growth
markets grew 11 percent, which outpaced the majors by 10 points,"
Loughridge added. "Growth markets now make up 22 percent of our geographic
Revenue from software for Q4 2011 was
$7.6 billion. Revenue from IBM's key middleware products, which include
WebSphere, Information Management, Tivoli, Lotus and Rational products, was
$5.2 billion, an increase of 11 percent versus the fourth quarter of 2010.
Operating systems revenue of $710 million increased 3 percent compared with the
Revenue from the WebSphere family of
software products increased 21 percent year over year. Information Management
software revenue increased 9 percent. Revenue from Tivoli software increased 14
percent. Revenue from Lotus software decreased 2 percent, and Rational software
increased 4 percent, IBM said.
Meanwhile, revenue from the Systems and
Technology segment totaled $5.8 billion for the quarter, down 8 percent from
the fourth quarter of 2010. Total systems revenue decreased 7 percent. However,
revenue from Power Systems increased 6 percent compared with the 2010 period.
Revenue from System z mainframe server products decreased 31 percent compared
with the year-ago period, which was the first full quarter after a new product
introduction. Total delivery of System z computing power, as measured in MIPS
(millions of instructions per second), decreased 4 percent, IBM said.
Loughridge said every key category of
IBM technology either gained or held share except the mainframe. "The only
place we lost share was the mainframe," he said. "Now who do you
think we lost share to? We lost share to Poser series-our own product.
"Within hardware, Power Systems
was up 6 percent, as we continued to drive competitive displacements,"
Loughridge said. "We've now had 15 consecutive quarters of share gain in
Unix. In fact, with the exception of mainframe, which was coming off of the
biggest quarter in its history last year, each of our 16 brands across the
company gained or held share."
In addition, in the hardware space,
Loughridge said IBM continues to displace competitors' products.
"We continued our success in
competitive takeouts," Loughridge said. "In the fourth quarter, we
had over 350 competitive displacements, which resulted in over $350 million of
business. This is our strongest quarter in terms of competitive displacements
since we started tracking this in 2006. Roughly 60 percent of this business
came from HP, with most of the balance from Oracle/Sun. 2011 was the second
year in a row we had over 1,000 competitive displacements, which this year
generated over $1 billion of business."
Looking at the year in total, IBM's net
income for the year ended Dec. 31, 2011, was $15.9 billion, compared with $14.8
billion in the year-ago period, an increase of 7 percent.