Sales And Earnings Flat At IBM

Diverse product line helps insulate vendor from ongoing tech slump.
Technology bellwether IBM on Wednesday reported relatively flat earnings and revenue for its third quarter ending Sept. 2. The company earned 99 cents per share during the period, compared with 97 cents a year ago, on income of $1.7 billion. Analysts surveyed by First Call were, on average, expecting IBM to report earnings of 96 cents a share for the period. If losses incurred from the sale of its disk-drive business to Hitachi in June are included, IBM's per-share earnings for the period drop to 76 cents--off 18% from a year ago. Revenue was virtually unchanged from the year-ago quarter at $19.8 billion.

While none of IBM's individual business units managed much growth during quarter, none suffered a significant downturn either, despite the fact that the technology market remains mired in a slump. IBM's Global Services arm posted a 2% increase in year-over-year revenue, to $8.9 billion. Hardware sales decreased 1%, to $6.8 billion, and software revenue fell 3%, to $3.1 billion.

Analysts say IBM's diverse product mix has helped it maintain an even keel during the tech downturn. Lehman Bros. analyst Dan Niles notes that, although IBM remains a leading Unix vendor, its Linux push has helped it maintain a strong presence at the low end of the server market and thus has insulated it from the commoditization that's hurting competitors such as Sun Microsystems while boosting the fortunes of price leader Dell Computer. "IBM is best positioned at the high end," Niles says, "but they are very well hedged by being a strong supporter of Linux."

Editor's Choice
Brandon Taylor, Digital Editorial Program Manager
Jessica Davis, Senior Editor
Terry White, Associate Chief Analyst, Omdia
Richard Pallardy, Freelance Writer
Cynthia Harvey, Freelance Journalist, InformationWeek
Pam Baker, Contributing Writer