IBM's first quarter earnings and sales were better than expected as the company software unit posted double-digit revenue growth. The company also raised its earnings outlook for 2010.
Big Blue reported first quarter earnings of $2.6 billion, or $1.97 a share, on revenue of $22.9 billion, up 5 percent from a year ago. Wall Street was looking for $1.93 a share on revenue of $22.7 billion, according to Thomson Reuters.
IBM said it was confident that it could grow revenue. The company also projected 2010 earnings of $11.20 a share. Wall Street was looking for $11.12 a share for 2010. IBM added that it expects revenue growth for its hardware, software and services businesses in the second quarter.
On a conference call with analysts, IBM CFO Mark Loughridge said the public sector---think government---remained the company's strongest revenue driver. Loughridge said that IBM was also strong in small and mid-sized businesses. As you look across our geographies, IT spending growth has been uniform, he added.
By the numbers for the first quarter (statement):
- Americas revenue was $9.5 billion, up 2 percent from a year ago. Revenue from Europe Middle East and Africa were $7.6 billion, up 5 percent. Asia Pacific revenue was up 10 percent to $5.3 billion.
- Software revenue was $5 billion, up 11 percent from a year ago. Software revenue was powered by the middleware unit, which includes WebSphere, Tivoli, Lotus and Rational. Middleware revenue was $2.8 billion, up 13 percent from a year ago.
- Global services revenue was up 4 percent. Technology services revenue was up 6 percent to $9.3 billion. Global business services revenue was flat at $4.4 billion. Services contracts signed were $12.3 billion, down 2 percent.
- The systems and technology unit delivered revenue of $3.4 billion, up 5 percent. System x revenue jumped 36 percent, but Power Systems sales fell 17 percent.
- IBM ended the first quarter with $14 billion.