IBM income down slightly from Q3 2004

IBM on Monday reported quarterly income from continuing operations of US$1.5 billion (AU$2 billion), down slightly from US$1.6 billion in the third quarter of 2004.

IBM's total revenue for the third quarter of 2005 was US$21.5 billion, down 8 percent from the third quarter of 2004. Excluding IBM's divested PC business, the company's revenue increased 4 percent from a year ago.

IBM's earnings per share for the third quarter of 2005, which ended Sept. 30, was US$0.94, IBM said in a press release. Earnings per share, excluding a one-time charge of US$525 million for taxes connected with the planned repatriation of foreign earnings, were US$1.26 per share, beating the US$1.13 per share consensus estimate of analysts polled by Thomson First Call.

Excluding one-time charges, IBM's earnings per share in the third quarter of 2004 was US$1.03.

Without one-time charges, IBM's income from continuing operations was US$2 billion for the third quarter of 2005, up US$292 million, or 17 percent, from the same quarter in 2004, the company said.

IBM, based in Armonk, New York, had a "good quarter," showing the strength of the company's business model in hardware, software and services, said Samuel Palmisano, IBM's chairman and chief executive officer, in a statement. IBM revenue for business transformation services grew more than 30 percent from the third quarter of 2004, the company said.

Revenue figures for IBM's hardware, software and services divisions showed strong increases, added Mark Loughridge, IBM's senior vice president and chief financial officer. Taking out IBM's now-sold PC business, hardware revenue, as well as the company's total revenue, increased from the third quarter of 2004, he said.

"Our third-quarter profit performance reflected the breadth and flexibility of our business model and puts us back on track for the year," Loughridge said.

IBM fell short of analyst earnings-per-share expectations in the first quarter of 2005, even though revenue was up 3 percent from a year earlier. In the second quarter, IBM's revenue declined 3 percent from the second quarter of 2004.

In the third quarter, revenue from IBM's Global Services Group grew 3 percent to US$11.7 billion. The company signed services contracts totalling US$11 billion in the quarter, IBM said.

Hardware Group revenue decreased 32 percent to US$5.1 billion, including revenue from the company's divested PC business. Hardware revenue, excluding the PC business, increased 7 percent, IBM said. IBM sold its PC business to China's Lenovo Group last year.

Hardware revenue from the Systems and Technology Group was US$5 billion, up 7 percent. Revenue growth from the group's eServer products was driven by sales of iSeries midrange servers. Revenue for iSeries increased 25 percent, IBM said.

Revenue from software was US$3.8 billion, increasing 5 percent from the third quarter of 2004. Revenue from IBM's middleware brands, including WebSphere, DB2 and Tivoli, was US$3 billion, up 6 percent from the third quarter of 2004. Revenue increased 14 percent in IBM's WebSphere family of products, the company said.