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7/19/2010
04:58 PM
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IBM Posts 13% Earnings Gain, Raises Guidance

Big Blue beats Street's expectations for EPS but revenue falls just short of estimates.

IBM on Monday reported solid numbers across most of its business lines for the second quarter and raised full year earnings guidance.

The company said revenue came in at $23.72 billion—shy of the $24.17 billion expected by Wall Street analysts surveyed by Thomson Reuters but 2% higher than the same period a year ago. Net income jumped 9.1% to $3.39 billion, while earnings per share came in at $2.61, up 12.5% from the previous year.

Analysts expected EPS of $2.58.

"In the second quarter we again delivered double-digit earnings-per-share growth, increased margins, as well as improving constant-currency revenue performance in our ongoing software, services, and hardware businesses, and in all geographies," said IBM CEO Sam Palmisano, in a statement.

IBM saw modest sales growth across all its major product groups. Global Technology Services sales increased 1.4% to $9.23 billion, Global Business Services revenues were up 3.3% to $4.48 billion, software sales climbed 2.1% to $5.27 billion, while hardware sales from the company's Systems and Technology group grew 3.49% to $4 billion.

Geographically, IBM said sales increased 9% in the Asia-Pacific region and 3% in the Americas, while declining 6% across Europe, the Middle East, and Africa. Big Blue also said revenue from so-called BRIC countries—Brazil, Russia, India, and China—was up 22%.

In a positive sign for the tech industry, Palmisano said he expects the growth at the bellwether IT vendor to continue through the second half of 2010.

"With the benefit of our strategic growth investments, our mix of higher-value business and the introduction of new System z and Power Systems, we are confident of our ability in the second half of the year to continue our strong business performance, grow profit, and drive shareholder returns," Palmisano said.

As a result, IBM raised full-year EPS guidance to at least $11.25, from previously announced guidance of at least $11.20.

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