IBM is no doubt all smiles today after announcing fourth quarter earnings of $2.7 billion, or diluted earnings per share of $1.48, compared to $2.1 billion, or $1.12 per share, during the same time a year ago. The results beat analysts’ expectations and represented a 28 percent increase from the same period a year ago.
Revenues were $25.6 billion, up 6 percent from the $24.2 billion it took in during the 1999 fourth quarter.
For the year, IBM said its diluted earnings per common share increased by 19 percent to $4.44, and that net income totaled $8.1 billion, a 16 percent increase over 1999 net income of $7.7 billion, or $4.12 per common share, excluding one-time charges and the sale of one of its units. For the year, total revenue was $88.4 billion compared to $87.5 billion in 1999, up 1 percent.
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Louis Gerstner, Jr., chairman and chief executive officer, said the results flowed from momentum the company began building three years ago.
“Those strategies start with three premises: the marketplace is increasingly driven by services and solutions, not products; the marketplace is now driven by powerful, scalable servers, not PCs; and success will require open, heterogeneous platforms,” Gerstner said.
He’s not kidding about the services part. The Armonk, NY-based company (and the largest technology company in New York City) said although last year arrived amid a dot-com mania and a proliferation of boutique Internet services companies, IBM stayed focused on its own consulting services strategies. The division ended the year with a backlog of $85 billion, up from $60 billion at the end of 1999.
The Year 2000 code freeze that swept across corporate America by the end of 1999 was felt in some of IBM’s divisions, including the sale of the IBM Global Network division to AT&T in 1999. Software revenues were $3.6 billion, down 1 percent of the same quarter a year ago; helping to mute the Y2K effect somewhat was growth in its middleware segment, especially in database and Web-management software.
Hardware revenues were up 10 percent to $11.4 billion from fourth quarter 1999, helped in part by strong sales among its UNIX-type servers. Storage revenues also helped boost that growth as well.