IBM net income up 12 percent boosted by BRIC sales

WASHINGTON - Buoyed by strong performance in Brazil, Russia, India and China as well as solid sales of analytics software and services, the third-quarter net income of International Business Machines Corp (IBM), rose 12 percent to US$3.6 billion.

While total revenue reached $24.3 billion, a jump of 3 percent, revenue in the four BRIC countries jumped 29 percent year-over-year, IBM, the world’s largest computer-services provider, said Monday.

In contrast, the Americas saw a 3 percent increase in revenue to $10.2 billion, while Europe, the Middle East and Africa (EMEA) dropped 6 percent to $7.4 billion.

Those figures suggest that emerging markets are “out of the blocks” and rebounding faster from the global recession that developed economies, CFO Mark Loughridge said during a conference call.

Revenues from the company’s growth markets organization increased 16 percent (13 percent, adjusting for currency) and represented 21 percent of IBM’s total geographic revenue in the quarter.

Besides BRIC countries, 28 other growth market countries also had double-digit revenue growth, adjusting for currency. Growth markets revenues for both servers and storage increased by more than 20 percent in the quarter.

Software revenue was up 1 percent to $5.2 billion. Within that group, revenue from IBM’s WebSphere middleware increased 14 percent. Tivoli software sales grew 9 percent, while Lotus and Rational software sales were flat. Business analytics revenue across software and services rose by 14 percent.

Systems and Technology revenue was up 10 percent to $4.3 billion, with System x server sales jumping 30 percent and System z mainframe revenue up 15 percent. Power Systems sales fell 13 percent, however, while storage revenue grew 7 percent.

Global Technology Services revenue ticked up 1 percent to $9.5 billion, while Global Business Services segment revenues rose 5 percent to $4.6 billion.

The company signed $11 billion in service contracts in the quarter, a drop of 7 percent. Outsourcing contract signings fell 15 percent to $5.7 billion, but would have climbed 14 percent if an agreement signed Oct 8 had made it into the quarter, IBM said.

IBM expects a strong fourth quarter for System z sales, thanks partly to a major new “system of systems” product release, Loughridge said.

Services and hardware sales will likely remain level next quarter, but software growth should accelerate, he added.

(Arun Kumar can be contacted at arun.kumar@ians.in)