IBM’s (IBM) quarterly figures for the second period of the year not only beat analysts’ estimates; they beat whisper figures which were much higher. IBM reported EPS of $2.32 up 18%. Wall St. had expected $2.01.
Revenue was $23.3 billion, down 13%. IBM had net income of $3.1 billion, up 12%.
The most important news from the earnings announcement is that IBM increased its EPS guidance for the year, fairly extraordinary given the state of the economy. The tech giant raised its forecast to $9.70 from $9.20.
Although revenue dropped across IBM’s major businesses, margins improve significantly in several. The global technology services group lost 10% of its revenue falling to $9.1 billion, but margins moved to 34.3% from 31.5% in the same period a year ago.
Revenue in the global business services operation fell 15% to $4.3 billion, and margins moved up slightly to 26.8%.
IBM’s highest margin operation, software, posted an increase from 84.3% to 85.1% on a 7% drop in revenue to $5.2 billion.
The only real disappointment for the quarter was the systems and technology group where revenue fell 26% to $3.9 billion and margins fell by over two points to 35.7%. Mainframe server sales were off sharply.
After closing up 3% for the day, IBM rose another 1.6% after hours to $112.55.
Douglas A. McIntyre
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