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Mainframes And Services Bolster IBM

The company posted solid second-quarter increases in revenue and net income thanks to gains in mainframe sales and several new services deals.
IBM on Thursday reported solid increases in second-quarter revenue and earnings on the strength of robust mainframe sales and the signing of several lucrative IT and business process outsourcing contracts.

For the three months ending June 30, IBM's revenue increased 7% to $23.2 billion compared with a year earlier while net income rose 15% to $2 billion. For the period, the company posted per-share earnings of $1.16, an increase of 18%.

Revenue from the company's systems and technology group increased 10% to $4.2 billion as sales of mainframe computing power increased sharply. Total delivery of mainframe computing power as measured in MIPS (millions of instructions per second) increased 75% in the second quarter compared with a year earlier, IBM said. Sales of PCs and other personal computing devices increased 16% to $3.2 billion.

Revenue from IBM's Global Services unit increased 7% during the quarter to $11.3 billion. During the period, IBM signed new services contracts totaling more than $10 billion. Among others, IBM announced services contracts during the quarter with Aetna, Marathon Oil, and Qantas Airways.

IBM's software group didn't fare as well. Second-quarter sales totaled $3.5 billion, essentially flat with a year ago. Within that, operating-system revenue fell 2%.

Most of IBM's sales growth in the second quarter came outside of the United States, with Asia/Pacific leading the way with a 13% increase. Sales increased 9% in the region comprising Europe, the Middle East and Africa. Sales in the Americas rose 2%.