Sunny results in a cloudy economy
Last modified on Friday, 18 July 2008 08:33
IBM beat the pants off Wall Street estimates and has reported a 22 percent rise in quarterly profit. Even raising its 2008 forecast. IBM also posted a 12 percent rise to $14.7 billion in new service contracts, its world-leading business, and indicated that the increase was largely due to Western countries’ technology purchases for cost and risk management and compliance.
CFO Mark Loughridge of IBM indicated that U.S. revenue grew five percent this quarter and the weak dollar actually helped IBM. He also indicated that currency hedges would help IBM mitigate strengthening of the dollar next year, and that for 2010 IBM was ahead of its profit target. IBM‘s second-quarter net income increased to $2.77 billion from $2.26 billion over the previous year, while revenue increased by 13 percent to $26.8 billion.
IBM’s Global Technology Services business did not disappoint either, increasing by 15 percent to $10.1 billion, with revenue increasing by 18 percent to $5.1 billion. This also pleased analysts, as it indicates that customers are making new investments in technology, rather than cutting back on it. IBM’s software revenue increased by 17 percent to $5.6 billion, following its pattern as IBM’s most profitable business.