Software, Services Drive Solid Q1 Growth for IBM

By CIOinsight  |  Posted 04-18-2012 Print Email
Once again, software is a key driver of growth for IBM, as Big Blue saw software profits rise 12 percent on software revenue of $5.6 billion for the first quarter of 2012.

IBM (NYSE: IBM) announced first-quarter 2012 profits of $3.1 billion, spurred by increases in software, services and growth markets.

IBM's first-quarter net income of $3.1 billion when compared with $2.9 billion in the first quarter of 2011 represents an increase of 7 percent. Meanwhile, total revenue for the first quarter of 2012 of $24.7 billion was flat from the first quarter of 2011, the company reported.

"In the first quarter, we drove strong profit and earnings per share growth," said Ginni Rometty, IBM president and CEO, in a statement. "We delivered another excellent software performance, expanded services margins, and continued the momentum in our growth initiatives. Our investments in growth market countries continued to generate strong revenue growth across software, hardware and services while contributing to the company s ongoing margin expansion. Based on this performance, we are raising our 2012 full-year operating earnings per share expectations to at least $15.00."

Revenue from the company's growth markets increased 9 percent, and 40 countries had double-digit revenue growth. Revenue in the BRIC countries--Brazil, Russia, India and China--increased 10 percent, IBM said. Regarding regions, the Americas' first-quarter revenue was $10.5 billion, an increase of 1 percent from the 2011 period. Revenue from Europe/Middle East/Africa was $7.6 billion, down 2 percent, and Asia-Pacific revenue increased 4 percent to $6.1 billion. OEM revenue was $509 million, down 17 percent compared with the 2011 first quarter.

Meanwhile, revenue from IBM's software business was $5.6 billion, an increase of 5 percent compared with the first quarter of 2011. Revenue from IBM's key middleware products, which include WebSphere, Information Management, Tivoli, Lotus and Rational products, was $3.5 billion, an increase of 7 percent versus the first quarter of 2011. And operating systems revenue of $590 million increased 9 percent compared with the prior-year quarter.

For its part, revenue from the WebSphere family of software products increased 16 percent year over year. Information Management software revenue increased 5 percent. Revenue from Tivoli software increased 5 percent. Revenue from Lotus software was flat, and Rational software increased 1 percent, IBM said.

Moreover, revenue from the company's business analytics operations across services, software and hardware segments increased 14 percent.

"We continued our strong performance in software," said Mark Loughridge, senior vice president and chief financial officer for Finance and Enterprise Transformation at IBM, in a call with analysts. "Software profits were up 12 percent, driven by growth in business analytics, cloud and Smarter Planet businesses," he said.

Loughridge said IBM's growth initiatives of business analytics sales rose 14 percent year over year, cloud-related revenue doubled and Smarter Planet revenue grew more than 25 percent year over year. In addition, growth markets, another of IBM's key growth initiatives, grew 9 percent year over year.

For its services business, IBM's Global Technology Services segment revenue increased 2 percent to $10.0 billion, and the company's Global Business Services segment revenue was down 2 percent to $4.6 billion.



 

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