Average Rating: Rate this article:

IBM Sees Better Profit Despite Tech Sales Slump By Jordan Robertson October 19, 2009 7:15AM     IBM now focuses on outsourcing and other services that save clients money and are more profitable than selling hardware. A flurry of recent acquisitions from Hewlett-Packard, Dell, Xerox and Oracle have thrust those companies deeper into IBM's turf. IBM's latest results show why its business model might be attractive to rivals.   Related Topics IBM Tech Sector Outsourcing Sales Slump Accenture Intel Tech Services Latest News Plasma-TV Ban Could Be Costly Barnes & Noble Nook Is Delayed Flat PC Shipments Hurt Dell's Stock Ballmer Says Windows 7 Sales Good New Pogoplug 'Cloud' Gets Social IBM Corp. is a rare example of a company that has kept boosting profit even as the recession has sapped its sales. The ability comes from IBM's transformation from a hardware company on the brink of collapse in the 1990s to a one-stop technology shop that rivals are trying to emulate. IBM now focuses on outsourcing and other services that save clients money are more profitable than selling hardware. A flurry of recent acquisitions from Hewlett-Packard Co., Dell Inc., Xerox Corp. and Oracle Corp. have thrust those companies deeper into IBM's turf. IBM's latest results, reported Thursday, show why its business model might be attractive to rivals. Revenue dropped 7 percent in the July-September quarter, but profit jumped 14 percent and IBM raised its 2009 forecast for the second time. IBM expects at least $9.85 per share in profit in 2009, ahead of analysts' average forecast of $9.78 per share, according to Thomson Reuters. IBM had raised its guidance in July to at least $9.70 per share. Still, shares fell $5.92, 4.6 percent, to $122.06 in trading Friday morning. Some investors were apparently disappointed the increase wasn't bigger. "A lot of us thought you might get even better than this," said Peter Misek, an analyst with Canaccord Adams. "But these results are solid." IBM's net income in the quarter ended Sept. 30 was $3.2 billion, or $2.40 per share, versus $2.8 billion, or $2.04 per share, a year ago. Analysts expected $2.38 per share. Sales were $23.6 billion, slightly better than the $23.4 billion expected by analysts polled by Thomson Reuters. Revenue would have been down 5 percent instead of 7 percent if it were not for currency fluctuations. IBM's numbers show that corporations are still reluctant to spend on some kinds of technology. Accenture, an IBM rival in consulting, and Intel Corp., which makes most of the world's computer microprocessors, have recently said a recovery in business tech spending might not happen until next year. The value of services contracts that IBM signed in the quarter was $11.8 billion, a decline of 7 percent from the same period in 2008. While IBM makes most of its money from services and software, hardware still makes up nearly a fifth of its revenue. Mark Loughridge, IBM's chief financial officer, said in an interview that market share gains in servers at the expense of the world's No. 4 server maker, Sun Microsystems Inc., were a significant help in the quarter. IBM has exploited uncertainty about Oracle's proposed $7.4 billion acquisition of Sun to steal away customers.   © 2009 Associated Press/AP Online under contract with YellowBrix. All rights reserved.   Advertisement  Business Briefing 1.   Sony CEO Outlines Turnaround Plan 2.   Sony Ericsson Closes Sites, HQ Moves 3.   Intel Leads Retreat in World Markets 4.   MS Told To Stop Some Windows Sales 5.   Sources: MySpace May Buy imeem Multimedia E-Reader Unveiled Creative Labs prepares Mediabook. Average Rating: Vista More Secure Than Windows XP Windows 7 security could be expensive. Average Rating: Motorola's Droid Appears Strong Early estimates put sales at 250,000. Average Rating:

Product Information and Resources for Technology You Can Use To Boost Your Business CRM Systems   Experience CRM—and Business—Success today with Salesforce.com. Contact Centers   Run Your Entire Contact Center in the Cloud with LiveOps Enterprise Hardware   Go Green with IBM Blade Center    Enterprise I.T.    Rackspace: It makes a difference when you focus on support.   Go Green with IBM Blade Center   APC introduces server room in a box solutions!   Tell us what you think. Take a survey.   Find out how much you can save with the SQL Server value tool.   See how AT&T can help protect your network. Enterprise Software   Read the Top 10 Reasons to Upgrade to Windows Server 2008 R2. Microsoft/Windows   Rackspace: It makes a difference when you focus on support   Read the Top 10 Reasons to Upgrade to Windows Server 2008 R2. Network Security   See how AT&T can help protect your network.

Network Security Spotlight

House Lawmakers Push Ban on Peer-to-Peer Software Stung by an embarrassing electronic leak revealing ethics investigations into dozens of lawmakers, Congress moved to prohibit federal employees from using the file-sharing software blamed for the disclosure.   GAO: Los Alamos Computer Security Has Weaknesses Security weaknesses uncovered in Los Alamos National Laboratory's computer network increase the risk of a classified-information breach, says the Government Accountability Office.   Computer Security Firm Fortinet Plans IPO This Week Fortinet plans to go public in an initial public offering, giving investors a chance to tap a network security provider with sales that are expected to grow. The IPO could be valued at $137.5 million or more.

Enterprise Hardware Spotlight

Flat Shipments Hurt Dell Despite Increased Earnings Dell's earnings are up and expectations are solid, but the company's stock still took a hit after analysts signaled the company isn't playing a key role in the PC market recovery.   New Pogoplug 'Personal Cloud' Does Social Networking Cloud Engines has released its newest version of the Pogoplug, a small "multimedia sharing device" that connects hard drives to the Internet and allows a user to access the files remotely.   Apple Tablet Rumored Delayed as Publisher Gears Up There have been so many rumors of an Apple tablet that it has taken on legendary status. But now the legend is being revised with reports of a delay and that a major publisher is getting ready.

Enterprise Technology Spotlight

Flat Shipments Hurt Dell Despite Increased Earnings Dell's earnings are up and expectations are solid, but the company's stock still took a hit after analysts signaled the company isn't playing a key role in the PC market recovery.   Smartphones: A Bigger Target for Security Threats Smartphones are increasingly prevalent and adept at handling more tasks, including trading stocks, paying bills, and buying stuff online. That makes them attractive to thieves and hackers.   FBI Says Hackers Targeting Law Firms, PR Companies Hackers are targeting law firms and public relations companies with a sophisticated e-mail scheme that breaks into their computer networks to steal sensitive data, often linked to large corporate clients.

Navigation NewsFactor Network Home/Top News | Enterprise I.T. | Hardware | Software | Communications | Network Security | Wireless Tech | Linux/Open Source Apple/Macintosh | Microsoft/Windows | World Wide Web | Data Storage | E-Commerce | Personal Tech | Tech Trends | Press Releases NewsFactor Network Enterprise I.T. Sites NewsFactor Technology News | Enterprise Security Today | CRM Daily NewsFactor Business and Innovation Sites Sci-Tech Today | NewsFactor Business Report NewsFactor Services FreeNewsFeed | Free Newsletters | Free Whitepapers | About NewsFactor Network | How To Contact Us | Article Reprints | Careers @ NewsFactor | Services for PR Pros | Top Tech Wire | How To Advertise Privacy Policy | Terms of Service © Copyright 2000-2009 NewsFactor Network. All rights reserved. Article rating technology by Blogowogo.