IBM’s Profit Up on Hardware, Software Gains

IBM continued on its growth course, with hardware and software gains pushing revenue up 12 percent and net income up 8 percent for the second quarter of 2011.

IBM reported revenue of $26.7 billion for the quarter, up from $23.7 billion in the same quarter last year. Net income in the latest period rose to $3.7 billion from $3.4 billion for the second quarter of 2010. Revenue for both IBM Software and IBM’s Systems and Technology Group was up 17 percent. And the company continues to invest heavily in a growth-markets strategy that is paying off.

During a call with financial analysts to discuss the company s Q2 earnings, Mark Loughridge, IBM s chief financial officer, said IBM’s software growth was driven by key branded middleware, which was up 21 percent. IBM’s systems revenue was up 20 percent, with strong performance in System z, Power and System x servers. And Big Blue s total services backlog increased to $144 billion from $15 billion over last year, Loughridge said.

Moreover, Loughridge said growth-markets performance was strong, and revenue from these countries was up 13 percent. And the company saw continued momentum in all of its growth initiatives: growth markets, business analytics, cloud and Smarter Planet, he said.

“Since we announced our growth-markets unit in the beginning of 2008, the revenue growth rate has outpaced the major markets by an average of 9 points, on a local currency basis,” Loughridge said. “With 13 percent revenue growth, this is the fourth consecutive quarter of double-digit revenue growth and share gains. We also had double-digit growth and share gains in each of the BRIC Brazil, Russia, India and China countries. The combined revenue in the BRICs was up 21 percent. But our success goes beyond the BRICs; we had double-digit growth in almost 40 growth-market countries.”

In the growth countries, IBM saw a 24 percent increase in hardware sales. In fact, IBM gained 24 new mainframe customers in growth-markets countries since the introduction of the zEnterprise system last year.

To read the original eWeek article, click here: IBM Q2 Profit Up on Steady Hardware, Software Gains

CIO Insight Staff
CIO Insight Staff
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