IBM posts improved margin, better sales in the fourth quarter

IBM - on an upswing

IBM – on an upswing

US computing giant IBM posted impressive growth for the fourth quarter, driven by renewed IT spending by companies and strong demand for its Mainframes.

IBM sales rose by 7 percent to $29 billion (£18 billion) and profit for the quarter was recorded at $5.26 billion, up by 9 percent. Sales from mainframe computers jumped 69 percent over same period last year, due to the newly launched Z line series.

In a sign of growing business confidence worldwide, its IT contracts were up by 24 percent in the quarter.

IBM’s service line of business – including the outsourced service vertical, had witnessed a decline in revenue for the first three quarters of the year. Companies were unwilling to sign long term contracts as managers were unsure of the economic recovery. The company stated that its unfinished backlog order-book swelled by $5 billion to $142 billion for the quarter, a sign of robust demand for its services.

IBM has shifted its focus away from hardware manufacturing over the last decade and concentrated on IT services industry. However, the company manages to source its hardware equipments internally when it bags any large services contract.

Revenue growth was even across all products and services segment. Geographically, emerging markets continued to outperform with sales in Russia growing by 46 percent and China registering a 25 percent growth.

Earnings Per Share (EPS) stands at $4.24, beating analysts’ projection of $4.08. The company had registered an EPS of $3.65 last year.

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