Services Growth Fuels IBM's Third Quarter Results

IBM, always a reliable bellwether for the overall health of the high-tech industry, reported solid revenues and earnings for the third quarter yesterday, which were buoyed by the performance of its services unit.

While its overall earnings were up 6 percent, Big Blue's hardware sales fell some 10 percent to $4.9 billion. Some of that decline can be attributed to the recent sale of its printer division, but what was more notable were the numbers turned in by its mainframe group, which were down a whopping 31 percent. Chip sales, which were off by 15 percent, also disappointed some analysts,.

IBM's software group, perhaps the most profitable group in the company during the past few years, grew by 7 percent to $4.7 billion, although it would've been only 3 percent without shifts in the dollar.

But the best news came out of the company's mammoth services group, which reported revenues growth at 14 percent to $13.7 billion. What was at least as impressive was the 27 percent up-tick in pretax profits. Company officials reported that IBM signed some $11.8 billion in services contracts in the third quarter, up from $10.5 billion in last year's third quarter.

Overall revenues rose 7 percent to $24.1 billion, up from last's year's $22.6 billion, with earnings of $2.36 billion, up from last year's third quarter figure of $2.22 billion.

Posted by Ed Scannell on October 18, 2007 at 11:57 AM


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