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7/18/2007
04:26 PM
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IBM Reports 19% Increase In Second Quarter Earnings

IBM said revenue increased 9% year-over-year to $23.8 billion, while per-share earnings rose 19% to $1.55.

IBM on Wednesday beat Wall Street estimates as it reported a 19% jump in second quarter earnings and a 9% increase in revenue, closing out a period that CEO Sam Palmisano in a statement said showed the company is making "solid progress" toward its goals of boosting long term sales and profitability.

For the period, IBM said revenue increased 9% year-over-year to $23.8 billion, while per-share earnings rose 19% to $1.55. Net income from continuing operations was $2.3 billion, an increase of 12% over the second quarter of 2006.

On average, Wall Street analysts were expecting Big Blue to report second quarter revenue of $23.07 billion and per-share earnings of $1.47, according to a survey by Thomson Financial Network.

The earnings include a pre-tax gain worth five cents per share arising from IBM's sale of its printing systems unit to Ricoh.

IBM reported a 10% increase in key IT outsourcing sales during the quarter -- to $8.8 billion -- while sales of business process outsourcing services increased 10% to $4.3 billion. Services sales account for about half of the company's total revenue.

Second quarter sales of software, IBM's most profitable product line, rose 13% year-over-year to $4.8 billion. IBM's middleware and systems management lines of software, which include the WebSphere and Tivoli brands, posted a particularly strong gain -- up 16% to $3.7 billion.

The company's Systems and Technology Group, which comprises servers and other computing hardware, posted a modest 2% year-over-year sales gain to $5.1 billion.

Palmisano said IBM's results were bolstered in part by "the higher value that clients place on our expanding software product line and wide range of services offerings."

For the full year 2007, analysts are expecting IBM to report earnings per share of $6.86 on revenue of $95.83 billion.

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