IBM First-Quarter Earnings Up 12%

Revenue climbed 7% to $22 billion, while net income increased 8% to $1.8 billion for the quarter.
IBM said Tuesday that first-quarter earnings per share rose 12% on the strength of increased sales of high-margin products and services such as information management software and consulting.

For the three months ended March 31, IBM said earnings rose 12% year over year to $1.21 per share, in line with analysts' estimates. Revenue climbed 7% to $22 billion, while net income increased 8% to $1.8 billion.

"We continued to grow in the higher-value products and services that help our clients transform their businesses," IBM CEO Sam Palmisano said in a statement.

The company's Global Services unit -- which specializes in consulting, outsourcing, and systems integration services -- posted an 8% year-over-year sales gain. Software revenue, led by strong sales of middleware brands such as WebSphere, Tivoli, and Lotus, increased 9% overall.

The robust performance did not extend to some key hardware lines, however. Sales of midrange Unix- and Linux-based System i servers were off 13%, while storage product sales declined 1%. Overall, IBM's Systems and Technology hardware group posted a 2% year-over-year sales gain for the quarter.

Of late, Palmisano has been looking to rid IBM of weak-performing hardware offerings. In January, the company announced a $725 million deal to sell its lackluster printer business to Ricoh. In April 2005, Palmisano spun off IBM's storied PC business, selling it to China's Lenovo Group for $1.75 billion.

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