IBM sees growth as demand for servers returns
By Jenny • Jul 21st, 2010 • Category: Industry News
- Photo: IBM
IBM, the grandfather of modern computing, has had a respectable quarter, reporting well-received earnings buoyed by improving IBM server sales.
The numbers
IBM’s net income rose to $3.4 billion (about £2.23 billion), representing a 9 per cent increase over Q2 2009. Revenue for the quarter totaled $23.7 billion (about £15.57 billion), representing a 2 per cent increase over the same period last year. The revenue figures, however, fell half a billion dollars short of analyst expectations of revenues of $24.2 billion (about £15.9 billion). This shortfall is mostly attributable to currency changes in the period since April 2010 when the forecasts were first set.
Corporate spending to thank
As corporations come out of the last stages of recessionary hibernation, enterprise spending increased rapidly during the second quarter of the year. Servers – which make up a huge percentage of IBM’s business – have been one of the products these enterprises have been buying in drove. IBM announced during its earnings report that IBM server sales grew 30 per cent in the second quarter, on the heels of rising 36 per cent in Q1.
This lines up quite neatly with what Intel reported during its admittedly impressive earnings report, saying that its sales of server chips grew 42 per cent from the year prior.
A bit of boasting to boot
- Photo: Stock.Xchng
Of course, this growth is not only attributable to IBM server sales, with IBM software sales contributing $5.3 billion (about £3.48 billion) to the windfall, and the company’s entire middleware business contributing an additional $3.3 billion (about £2.17 billion).
Taking the opportunity to boast a little – and to reassure investors – IBM CEO Sam Palmisano said: ‘In the second quarter we again delivered double-digit earnings-per-share growth, increased margins, as well as improving constant-currency revenue performance in our ongoing software, services and hardware businesses, and in all geographies’, before concluding that he expects this trend to continue during the second half of the year.
Tags for this article: ibm, Q1
