IBM delivered a solid third quarter that featured better-than-expected profit and revenue growth. The company also upped its earnings targets for 2009.
IBM on Thursday reported third quarter net income of $3.1 billion, or $2.40 a share, on revenue of $23.6 billion, down 7 percent from a year ago. Wall Street was looking for earnings of $2.38 a share on revenue of $23.4 billion.
The outlook was also solid. IBM is expecting 2009 earnings to be about $9.85 a share, up from a previous projection of $9.70 a share. Wall Street had IBM at $9.78 for the year. On a conference call with analysts, IBM CFO Mark Loughridge said the company gained market share in both hardware and software. In software Websphere gained 3 percent market share on Oracle middleware, said Loughridge. On the hardware side, "we're taking it (share) from both Sun and HP," he added.
As usual, IBM's quarterly picture was really about services and software. For the three months ended Sept. 30, IBM's global technology services unit had revenue of $9.43 billion, down 4.4 percent from $9.86 billion a year ago. Global business services revenue was $4.34 billion, down 11.5 percent from $4.9 billion a year ago. Loughridge was bullish on IBM's ability to sign deals in the fourth quarter and said "some early signs were encouraging."
Loughridge added that corporate demand has stabilized going into 2010 with an improving sales pipeline. Loughridge said that's a substantial improvement and IBM has multiple opportunities ahead. Analysts, however, sounded like they wanted more from IBM's outlook.
Software revenue was $5.11 billion, down 2.6 percent from $5.25 billion a year ago. It is also notable that IBM delivered revenue growth across all of its products with the exception of Lotus.
IBM's hardware business remained weak. Big Blue delivered third quarter revenue of $3.92 billion, down 11.6 percent from $4.43 billion a year ago. Within hardware, IBM's mainframe server revenue took a hit, down 26 percent from a year ago.
Here's a look at IBM's geographic breakdown:
And revenue by industry: