IBM (NYSE: IBM) handily beat Wall Street estimates for its second quarter, despite continued declines in revenue across many of its business segments.
The company reported net income of $3.1 billion — 12 percent better than a year ago — and earnings of $2.32 per share, topping analyst estimates of $2.02, according to Thomson Reuters estimates.
“We are optimistic about how IBM is positioned to make the most of current growth opportunities as well as those that emerge as the economy recovers,” IBM chief Samuel Palmisano said in a statement.
The company raised its per-share earning projections for the full year,
from $9.20 to “at least” $9.70.
“We are well ahead of pace for our 2010 roadmap of $10 to $11 per share,” Palmisano said.
Revenues declined year-over-year for the second-straight quarter, however. IBM reported revenues of $23.3 billion, down 13 percent from a year ago. The dollar’s strength exaggerated the decline, the company said, noting that at constant currency, revenues slid only 7 percent.
Most verticals were hit hard, particularly industrial sales, which was down 23 percent, or 18 percent when adjusted for currency fluctuations. The one relative bright spot was government, where revenues were flat but up 7 percent at constant currency.
Revenue from Europe, Middle East and Asia together declined 20 percent, or 7 percent adjusted for currency changes. Americas revenue was also down 7 percent at constant currency, but down only 9 percent in dollar terms.
In its presentation to investors, the company highlighted a shift in its
portfolio away from hardware. In its place, software and services are
delivering double-digit annual profit growth, according to IBM.
Among software products, IBM’s Websphere product line was the winner,
with revenues up 8 percent year-over-year, 17 percent in constant currency.
Hardware revenues were down 26 percent, or 22 percent before currency fluctuation, with mainframe revenue proving particularly poor.
System z revenues were down 39 percent since last year, and the company said that “total delivery of System z computing power,” measured in MIPS (millions of instructions per second), dropped by 20 percent.
Another hardware sector performed even worse: Revenue from retail solutions was down 41 percent year-over-year, or 36 percent figuring constant currency.
Server sales, which comprised 65 percent of hardware revenues, performed relatively slightly better. Sales of System x, for instance, were down 22 percent, or 17 percent accounting for currency fluctuations.
Services didn’t escape unscathed, either. Signings in IBM’s consulting, systems integration and technology services units totaled $6.0 billion, a decrease of 14 percent (or 7 percent in constant currency), according to IBM.
The company stock rose during the day, from $106.84 per share at market open to $110.64 per share at the close. In after-hours trading, shares continued to rise, and reached $112.40 per share at press time.