IBM Second-Quarter Sales Flat, But Profits Jump - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Software // Enterprise Applications

IBM Second-Quarter Sales Flat, But Profits Jump

The company's biggest challenge is finding a way to kick-start its services business, which accounts for about one-half of its total sales.

IBM on Tuesday posted mixed results for its second quarter, reporting a 10% jump in net income as sales slumped 1.8%.

The company, which in recent months has been investing heavily in India in part to reduce operating costs, reported net income for the three months ended June 30 of $2.02 billion. Sales for the period slipped to $21.9 billion. Discounting sales from its now-divested PC business, IBM's second quarter revenue increased 1% year-over-year.

The company also reported a 14.9% jump in per-share earnings, to $1.31. Analysts surveyed by Thomson First Call, on average, were expecting earnings per share of $1.29.

IBM's biggest problem appears to be finding a way to kick start its growth-challenged services business, which accounts for about one half of its total sales. Its Global Services arm posted second quarter revenue of $8.4 billion, the latest in a string of no- or low-growth quarters. However, its services margins are improving as the company shifts more of the work to low-wage India. Gross margin for services was 27.7% in the second quarter, compared to 26.1% a year ago.

A bright spot for IBM was its software business, which saw revenues in the quarter increase 5.6% to $4.78 billion. Middleware sales, which include the Websphere, Tivoli, Lotus, and Rational product lines, rose 4%. On the hardware side, server group sales rose 3.5% to $5.28 billion, with zSeries mainframe-related revenue up 7%. Sales of Unix-based pSeries systems were off 10%.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
10 Top Cloud Computing Startups
Cynthia Harvey, Freelance Journalist, InformationWeek,  8/3/2020
How Enterprises Can Adopt Video Game Cloud Strategy
Joao-Pierre S. Ruth, Senior Writer,  7/28/2020
Conversational AI Comes of Age
Guest Commentary, Guest Commentary,  8/7/2020
White Papers
Register for InformationWeek Newsletters
Current Issue
Special Report: Why Performance Testing is Crucial Today
This special report will help enterprises determine what they should expect from performance testing solutions and how to put them to work most efficiently. Get it today!
Flash Poll