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IBM posts solid first quarter; Sees IT spending rebound across categories

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.
Written by Larry Dignan, Contributor on

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.
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  • IBM ended the first quarter with $14 billion.

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