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By Mel Duvall
IBM delivered a strong kickoff to the technology sector’s earning season Monday, posting a 9.1 percent increase in second-quarter profits and a 2 percent gain in revenues. The tech giant pointed to robust demand in growth markets and higher revenue from software and services.
“In the second quarter we again delivered double-digit earnings-per-share growth, increased margins, as well as improving constant-currency revenue performance in our ongoing software, services and hardware businesses, and in all geographies,” IBM chief executive Sam Palmisano said in delivering the results.
From a geographic standpoint, IBM said revenues in the Americas region rose 3 percent to $10.2 billion from the same period in 2009. The Europe, Middle East and Africa region was down 6 percent, to $7.4 billion, while Asia-Pacific revenues increased 9 percent, reaching $5.4 billion. Revenues from emerging growth markets increased 14 percent in the quarter.
The company’s global services organization saw $10.2 billion in revenues, a 2 percent increase from last year. IBM said it signed services contracts totaling $12.3 billion in the quarter, down 12 percent from a year earlier. However, 15 services contracts were for values greater than $100 million, compared with 13 contracts in the previous quarter.
Revenues from the company software segment were $5.3 billion, a 2 percent increase over 2009. IBM’s middleware lineup, including WebSphere, Information Management, Tivoli, Lotus and Rational products, led the way with $3.3 billion in revenue. The company’s WebSphere family of products, which are aimed at integrating and managing business processes across an organization, had a particularly strong showing, with a 17 percent year-over-year increase.
The company’s hardware business segment totaled $4 billion in the quarter, a gain of 3 percent. In a conference call, IBM chief financial officer Mark Loughridge said the company was winning deals at the expense of Oracle and its Sun server business.
In separate IBM corporate news, the company has shuffled its management ranks, giving expanded responsibilities to four senior executives. According to a report in the Wall Street Journal, Loughridge will add IBM’s global financing business to his portfolio. Senior vice president Michael Daniels, who previously ran half of the global services organization, takes over the entire role.
Steven Mills, who has been in charge of IBM’s software business, added the systems and technology group to his responsibilities, and Virginia Rometty, who oversaw global sales and distribution, now also takes on marketing and strategy.
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