IBM (NYSE:IBM) slightly beat Wall St. estimates with EPS of $2.40, an 18% improvement over the same period a year ago. The consensus estimate for the quarter was $2.38 . The huge computer and IT firm said its expected full-year EPS to be $9.85 against analysts’ estimates of $9.78.
Revenue was also slightly ahead of consensus figures at $23.6 billion against expectations of $23.4 billion. That was down 6% from the third quarter last year. Net income of $3.2 billion was a 14% improvement over the third quarter of 2008.
The economy is still badly crippling some of IBM’s businesses. Its large global technology services operation had a 4% drop-off in revenue to $9.4 billion, but margins improved from 32.7% to 35.5%. But, global business services revenue fell 11% to $4.3 billion and margins were only up slightly from 27.4% to 28.7%.
The real damage in the quarter was in IBM’s systems and technology operation which include mainframe sales. Revenue in this sector fell 11% to $3.9 billion and margins fell from 36.2% to 35.6%
The numbers were good, and obviously better than expected. They were, however, another example that American companies are improving earnings by managing costs and not through higher sales. The recession, at least measured by that yardstick, is not over.
Douglas A. McIntyre
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