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IBM's Performance May Indicate Better Times Are Coming

Revenue for its third quarter totaled $21.5 billion, up from $19.82 billion a year ago.
Providing a signal that the tech industry may finally be in for rosier times, bellwether IBM said Wednesday that third-quarter net earnings from continuing operations increased 37%, while sales rose 9%. For the period ended Sept. 30, the computing and services company reported net earnings of $1.79 billion, or $1.02 per share, compared with net earnings of $1.31 billion, or 76 cents on a per-share basis, in the year earlier period. Revenue totaled $21.5 billion, up from $19.82 billion a year ago.

In a statement, IBM CEO Sam Palmisano said the healthy numbers indicate that the tech economy has stabilized and that a lasting uptick may be in sight. "As we look to 2004, more customers are expected to increase their investments in information technology," Palmisano said.

Helping boost IBM's third-quarter numbers was the performance of its Global Services unit, which saw revenue increase 17% to $10.4 billion. The company signed more than $15 billion in new services contracts during the period. Revenue in IBM's software group jumped 11% to $3.5 billion on the strength of strong sales of middleware products such as WebSphere and the DB2 line of database software.

Even IBM's long-stagnant hardware division managed to eek out some gains. Its personal-systems group, which includes PC and laptop products, saw a 2% revenue increase as higher volume offset declining prices in those cutthroat commodity markets.

Finally, in what can only be seen as good news for the beleaguered IT employment picture, Palmisano said IBM is set to increase manpower. The company will hire 10,000 new workers with expertise in what he called the "key skills areas" of professional services, Linux deployment, and middleware technologies.