IBM Reports Growth In Third Quarter Sales, Profits

Technology bellwether IBM on Tuesday reported a solid third quarter as revenues increased 4% year over year to $22.6 billion. Net income was $2.2 billion, compared to $1.55 billion a year ago when the company's earnings were sharply reduced by a one-time tax-related charge. IBM earned $1.47 cents per share, up from 95 cents in the third quarter of 2005.

The company's closely watched Global Services business, which accounts for about half of its revenue, increased sales 3% to $12 billion. IBM signed services contracts totaling $10.5 billion during the period, compared to $11 billion in signings a year earlier.

IBM's overall hardware sales increased 9% to $5.6 billion. Revenue from System Z mainframe server products jumped 25% year-over-year, but those gains were somewhat offset by a 22% decline in Power Architecture-based System i servers. Sales of System p Unix servers rose 10%.

Software sales increased 9% to 4.4 billion, with middleware brands such as Websphere, Tivoli, and Rational showing a 12% revenue gain. Sales of IBM's Lotus software, which includes the venerable Lotus Notes franchise, jumped 8%.