IBM Shows Profit Growth Despite Hardware Revenue Drop
IBM recently disclosed the company's second quarter financial report and revealed that IBM experienced growth in terms of profit but had a revenue drop in terms of hardware.
IBM showed solid quarterly profits for the second quarter of this year. IBM reported a 6% increase in net income which is around US$3.9 billion. IBM also revealed that during the second quarter, IBM generated US$25.8 Billion in revenue which is down 3% if compared to the same period last year. This figure fell short as compared to the expected estimated figure by analysts. Thomson Reuters was one analysts that disclosed that it is expecting at least US$26.28 billion or 1.5% decrease.
Revenue generated by different parts of the world and functions also varied differently with each other. Here is the breakdown of the revenues per category.
Geographical Region
America - US$11.1 Billion (down 1%)
Europe, Middle East, and Africa - US$7.9 Billion (down 9%)
Asia-Pacific - US$6.3 billion (up 2%)
IBM Service
Global Technology Services - US$10 billion (down 2%)
Global Business Services - US$4.7 billion (down 4%)
IBM Software
Overall Software Sales - US$6.2 Billion (flat growth)
Middleware and Operating systems - no growth
Websphere - 3% increase in revenue
Lotus Software - 8% decrease in revenue
Rational software - 7% decrease in revenue
IBM Hardware
Systems and Technology - US$4.3 billion (down 9%)
Systems Sales and Service - 7% descrease in revenue
Power Systems - 7% descrease in revenue
System X - 8% decrease in revenue
System Z - 11% decrease in revenue
Virginia Rometty, the Chief Executive for IBM, released a statement providing an explanation for the second quarter report. According to the statement, "the strong profit performance reflected the success of the company's "long-term business model." That model combines focusing on higher-margin businesses and faster-growing markets abroad with aggressive cost-cutting. The strategy has served the company well, with earnings improving steadily throughout the recession and financial crisis."