IBM Posts Solid Q4 Earnings Performance
- By Scott Bekker
there was a good reason that IBM Corp. was one of the few major computer
companies that did not issue a fourth quarter profit warning.
escaped the financial woes that have plagued the IT industry of late,
announcing fourth quarter net income of $2.7 billion on Tuesday, a 28 percent
increase from the year-earlier period. In doing so, Big Blue earned $1.48 per
share, surpassing analyst expectations by two cents.
Overall, IBM’s fourth quarter revenues rose 6 percent to
$25.6 billion. For the full fiscal year, IBM’s earnings per share grew 19
percent to $4.44 per share, while net income increased 16 percent to $8.1
“We expected our revenue growth to continue in the fourth
quarter and that’s what happened,” John R. Joyce, IBM senior vice president and
chief financial officer, said in the earnings teleconference. “It’s clear from
our fourth quarter performance that the market is continuing to shift in our
Hardware revenue was a bright spot for IBM. After declining
during the first two quarters of 2000, hardware revenue was up for the second
quarter in a row, increasing 16 percent from the year-earlier period.
The IBM eServer family saw its revenue increase 35 percent.
IBM’s NT servers, the xSeries, saw its revenue increase 29 percent. “We saw
improved performance across the board in our server division, especially on Web
servers and the new z900 server,” said Joyce. According to IBM, there was also
a strong revenue increase in its pSeries Unix servers.
The Global Services division continued to be a strong market
for IBM, growing five percent in the fourth quarter. There was a particularly
strong demand for e-business services, which saw its revenues increase 70
percent from the year-earlier period.
On the down side, IBM’s software revenue was $3.6 billion, a
one percent decrease from the year-earlier period.
Looking ahead, IBM admitted there was concern about the
state of the U.S. market, but preached confidence nonetheless.
look to 2001 there is uncertainty about the economic climate in the U.S.,"
said Louis V. Gerstner, Jr., IBM chairman and CEO. “However, IBM's broad
portfolio should position us well relative to our competitors.” – Jim Martin
Scott Bekker is editor in chief of Redmond Channel Partner magazine.