IBM Q2 beats Wall Street estimates

With an anxious Wall Street looking on, IBM reported slightly higher earnings for the second quarter, as strong demand for its broad range of computer products and services offset lower sales of some hardware.
Written by Larry Barrett, Contributor and  Charles Cooper, Contributor

The world's largest computer maker said it earned $1.4 billion, or $1.46 per share, in the quarter, up from $1.3 billion, or $1.26 per share a year earlier, adjusted for a two-for-one stock split. The results were slightly higher than the Wall Street consensus estimate of $1.42 per share.

IBM's revenues rose four percent to $18.9 billion from $18.2 billion. Excluding changes in currency exchange rates, revenues climbed eight per cent, IBM said.

"These results show the ongoing strength of our broad business portfolio," said Louis Gerstner, IBM's chairman and chief executive. "Most important, we saw our position as a worldwide integrator of products and services grow stronger every day."

Most analysts predicted IBM would meet or surpass the First Call consensus.

"It's a strong quarter and would be even better if it included those shipments that were outsourced," said Daniel Mandresh, an analyst at Merrill Lynch. "It's especially good considering that a replacement cycle is on the horizon."

During the second quarter, IBM hired 4,000 workers but kept operating expenses flat at $5 billion.

Company officials said it will likely maintain or slightly improve upon its market share percentage in worldwide personal computer sales. It also cut PC prices last week to keep pace with price reductions initiated by its competitors.

"My take was very positive. I think the market will react bullishly," said industry consultant Sam Albert. "The only surprise was that they said the PC Company was flat or down. I thought they'd had a very good quarter."

In announcing its earnings following the close of trading Monday afternoon, IBM officials said strong results in some businesses

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