egoboss: IBM profits rise 11% on middleware revenue

IBM profits rise 11% on middleware revenue

A strong jump in revenue generated by its middleware software brands contributed to IBM Corp. recording profits of $3.54 billion for the fourth quarter, a rise of 11.1% over the same period last year.

The company had revenue of $26.26 billion for the quarter ending Dec. 31, an increase of 7.5% from last year and better than Wall Street estimates of $25.67 billion, according to analysts polled by Thomson Financial. IBM posted earnings of $2.26 per share, excluding extraordinary one-time gains, beating the analyst forecast of $2.19 and the $2.11 it posted in the same quarter of the previous year.

IBM relied heavily on revenue from its middleware group, which includes WebSphere, Information Management, Tivoli, Lotus and Rational. Together, those products generated $4.4 billion, up 18% from this quarter last year.

Revenue from other IBM business units rose by single-digit percentages, including an increase of 7% for global technology services, 3% for global financing, and 3% for the systems and technology group, which includes System z servers.

For the full year of 2006, IBM reported total revenue of $91.4 billion, an increase of 4% over 2005, excluding the PC business sold to Lenovo Group Ltd. IBM recorded annual net income of $9.49 billion, up 19.6% from its mark of $7.93 billion last year.

All of IBM's middleware brands grew faster than the overall market, Senior Vice President and Chief Financial Officer Mark Loughridge said on a conference call.

In its services business, IBM signed deals worth $17.8 billion in the quarter, up 55% from a year earlier. The company signed 14 deals worth more than $100 million, Loughridge said. These deals included contracts with Vodafone Group PLC, the state governments of Indiana and Texas, and the German army.

The company expects to meet analyst's expectations of 10% growth this year in income from continuing operations, Loughridge said. In addition, there is no reason to think IBM will slow down its acquisitions this year after buying 13 companies last year, according to Loughridge. Those acquisitions have paid off well, he said.

IBM will focus internal investments on its software business and on emerging markets, he said. Revenue from emerging markets grew 18% in the fourth quarter, adjusted for currency changes, compared with 5% growth in the Americas and Asia-Pacific and 3% in Europe, according to the company. Overall, business improved in France and Italy and recovered in the second half of the year in Japan.

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Posted at 07:41 AM in Web/Tech | Permalink

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January 19, 2007

IBM profits rise 11% on middleware revenue

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