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IBM released its fourth quarter results Tuesday and in yet another sign of the economy rebounding, it managed to come in at the top end of its earlier forecasts. Big Blue said fourth quarter profit grew 8.7% to $4.81 billion, or $3.59 a share, an increase from the $4.43 billion, or $3.27 a share it earned in the same period in 2008.
“We concluded a strong year with a solid performance in the fourth quarter in which we again delivered growth in margins, profit and earnings,” Chief Executive and President Sam Palmisano said in a statement. “IBM continued to benefit from our strategic transformation, offerings that our clients value in this economy, and our commitment to developing countries around the world.”
Essentially, Palmisano is saying that IBM’s decision years ago to place an ever-stronger emphasis on services over hardware is paying off big time.
Let’s take a look at some of the figures. Revenues from global services increased 4.4% in the quarter to $10.1 billion. That compares with a 4% decline in revenues from hardware, which falls under the Systems and Technology category. Systems and Technology Revenue came in at $5.2 billion in the quarter – essentially half those of services.
IBM said it signed services contracts totaling $18.8 billion in the quarter, an increase of 9%, including 22 contracts valued at more than $100 million.
Software was another bright spot for the company, with revenues increasing 2.4% in the quarter from $6.4 billion in 2008 to $6.6 billion in 2009. In particular, IBM said it saw strength in its WebSphere family of software products, middleware that connects applications, data and operating systems. WebSphere revenues increased 13% year over year. It also saw strong demand for its information management software and Tivoli infrastructure management software, both of which saw 7% increases.
The bottom line, says Palmisano, is that IBM believes it is on the right track and has the right strategy for an economic upswing.
“In 2009, we invested in opportunities such as Smarter Planet solutions, cloud computing and advanced analytics,” he said. “These new capabilities position IBM to grow as the economy recovers. We are confident about 2010 and our ability to achieve the high end of our long-term roadmap.”
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