IBM Post Slight Q1 Revenue, Earnings Increase

Vendor points to growth markets, Analytics, Smarter Planet initiatives. Posts bumps in software, systems, services revenue but services bookings decline.

IBM Corp. said that revenue for its first quarter 2010 rose 5 percent to $22.9 billion and net income jumped 13 percent to $2.6 billion when compared with the similar period last year.

While the vendor posted noticeable sales improvements in software, systems and services, its bookings for services engagements declined for the quarter, an indication that customers still are cautiously opting for smaller deals as economic conditions slowly improve.

Last week, researcher Gartner Inc. predicted that worldwide IT spending will climb by 5.3 percent to $3.4 trillion in 2010, followed by a 4.2 increase to more than $3.5 trillion in 2011.

IBM said that the value of its services contracts for the period totaled $12.3 billion, a decline of two percent. Thirteen of its services contracts exceeded $100 million each, the vendor said.

In large measure, IBM blamed the downturn in overall services contracts on a 23 percent dip in new deals for application management services, which the vendor offers for mainframe through Web-based applications to help customers maintain and operate software.

Had signings for application management services held fast, IBM’s total services revenue for the quarter would have jumped by four percent, year-over-year, the company said.

Contracts for IBM’s consulting services, driven by its Smarter Planet and Business Analytics initiatives, which comprised 25 percent of signings, increased by 18 percent, the vendor said.

Sales from IBM’s Global Financing arm fell by 7 percent for the quarter to $537 million.

IBM’s sales generated in the Americas climbed 2 percent to $9.5 billion as compared to the same period last year.

IBM chairman Sam Palmisano, in a statement, pointed to IBM’s sequential quarter-over-quarter growth.

“In the first quarter, we drove significantly improved revenue growth rates from the fourth quarter across our businesses and geographies,” said Palmisano. “We had strong results in strategic investment areas including growth markets, business analytics and Smarter Planet solutions,” he said.

Palmisano said that IBM expects full year 2010 diluted per share earnings of at least $11.20. For the first quarter, the vendor posted diluted per share earnings of $1.97, up 16 percent from the same period last year.

TAGS: services,software,IBM,revenue,smarter planet



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