NEW YORK -(Dow Jones)- International Business Machines Corp. late
Monday announced virtually flat earnings and sales for the
second-quarter, as weakness in Asia, currency issues, inventory problems
and pricing pressures dragged down most U.S. computer makers.
Armonk, N.Y.-based IBM (IBM) said net income came to $1.452 billion,
or $1.50 a share on a fully diluted basis, compared with $1.446 billion,
or $1.43 a diluted share, in the year-earlier period.
The mean estimate of analysts surveyed by First Call was for net
income of around $1.49 a share. The most recent "whisper" estimate on
Wall Street had been for earnings of between $1.50 and $1.52 a share.
Analysts were expecting weakness in Asia and softness in some core
businesses to stunt growth.
Revenue decreased slightly to $18.823 billion from $18.872 billion a
year ago. SoundView Financial Group Inc. analyst Gary Helmig and Salomon
Smith Barney analyst John Jones were looking for sales of around $19.5
billion.
IBM and other personal-computer makers engaged in price cuts to
reduce bloated inventories and analysts were bracing for IBM to show
weakness in various lines of computer hardware. Overall hardware sales
fell 13% to $7.5 billion.
But Big Blue's computer-services business, which is the
fastest-growing area of the company, did well. Services revenues rose
22% to $5.6 billion. Software sales rose 4.6% to $3.2 billion while
revenue from rentals and financing services rose 6.6% to $989 million.
Overall gross profit fell 3.4% to $7.1 billion.
With the earnings report, Wall Street has its first chance to size up
IBM's new chief financial officer, Douglas Maine, who started May 5.
Maine had a similar position at MCI Communications Corp..
IBM was affected by the same woes as its competitors in the second
quarter, but it was expected to be able to use its size to balance out
its business. The weakness in sales of mainframe computers can be
chalked up to the impending introduction of a new mainframe in August,
which has eaten into sales of the current line. |
