News

IBM First-Quarter Earnings Up 22 Percent

The residual effects of sweeping cost cuts helped first-quarter earnings at International Business Machines Corp. increase 22 percent and beat analysts' expectations Tuesday despite minor revenue growth.

In the first three months of the year, IBM earned $1.71 billion, $1.08 per share, on revenue of $20.7 billion. Wall Street's consensus estimates were for earnings of $1.05 a share and $20.7 billion in revenue, according to Thomson Financial.

In the same period of 2005, IBM's net income was $1.40 billion, 84 cents per share, with revenue of $22.9 billion. But those results included IBM's personal-computer division, since sold to Lenovo Group Ltd.

Excluding PC sales, the comparable figures from last year were profit of $1.37 billion, 82 cents per share, and revenue of $20.6 billion. While that amounted to virtually no change in revenue year over year, IBM said it would have seen 4 percent growth if not for the effects of currency fluctuations.

The report was released after IBM shares gained $1.67, 2 percent, to close at $83.31 on the New York Stock Exchange. In extended trading, the stock moved lower.

The earnings report comes amid questions over the health of IBM's technology services business, which provides more than half of Big Blue's revenue.

With increased competition from less-expensive providers around the world, IBM's services growth has been sluggish in recent quarters. Profit gains have been achieved largely through expense cuts and shifts in labor from costlier markets such as Europe to places like India.

In the first quarter of 2006, the services division showed a 1 percent drop in revenue, though IBM said it would have been a 3 percent gain without currency fluctuations.

The group landed $11.4 billion in services contracts in the quarter. While that will not be realized as revenue until future periods, the statistic is considered a leading indicator of IBM's services strength.

IBM did not immediately address analysts' full-year forecast of $5.81 in earnings per share and revenue of $90.6 billion.

Featured

  • Microsoft Offers Support Extensions for Exchange 2016 and 2019

    Microsoft has introduced a paid Extended Security Update (ESU) program for on-premises Exchange Server 2016 and 2019, offering a crucial safety cushion as both versions near their Oct. 14, 2025 end-of-support date.

  • An image of planes flying around a globe

    2025 Microsoft Conference Calendar: For Partners, IT Pros and Developers

    Here's your guide to all the IT training sessions, partner meet-ups and annual Microsoft conferences you won't want to miss.

  • Notebook

    Microsoft Centers AI, Security and Partner Dogfooding at MCAPS

    Microsoft's second annual MCAPS for Partners event took place Tuesday, delivering a volley of updates and directives for its partners for fiscal 2026.

  • Microsoft Layoffs: AI Is the Obvious Elephant in the Room

    As Microsoft doubles down on an $80 billion bet on AI this fiscal year, its workforce reductions are drawing scrutiny over whether AI's ascent is quietly reshaping its human capital strategy, even as official messaging avoids drawing a direct line.