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To: Johnny Canuck who wrote (42549)	7/19/2005 10:21:08 AM
From: Johnny Canuck	Respond to of 69967

Computer mammoth beats Street Continuing net rises to $1.14 U.S. Analysts expected only $1.03 a share armonk, n.y.—International Business Machines Corp. has reported second-quarter earnings that surpassed analysts' expectations, with improvement in the services division buoying the results. In the quarter ended June 30, IBM showed a net profit of $1.83 billion (U.S.), or $1.12 per share, compared with $1.74 billion, or $1.01 per share, a year earlier, the company said yesterday. That comparison, however, is skewed because the sale of IBM's personal-computer division to China's Lenovo Group Ltd. closed May 1, lowering the figures IBM posted in the remaining two months of the quarter. Looking only at continuing operations, IBM showed a profit of $1.85 billion, or $1.14 per share. Second-quarter revenue was $22.27 billion, down 4 per cent from $23.10 billion a year earlier. Without the one month of sales in the PC business, IBM's revenue would have been about $21.70 billion. Analysts surveyed by Thomson Financial had forecast earnings of $1.03 per share on revenue of $21.96 billion. "IBM returned to form in this quarter," chairman and chief executive officer Sam Palmisano said in a statement. The second-quarter figures included three big events that Wall Street traditionally discards when assessing a company's performance. IBM showed a gain of $1.1 billion from the Lenovo sale and a $775 million boost from an antitrust settlement with Microsoft Corp. IBM also took a $1.7 billion charge to account for the elimination of up to 14,500 jobs, primarily in Europe. The company earlier had said the job cuts would top out at around 13,000. Mark Loughridge, IBM's chief financial officer, said about half the affected people have already left the company. IBM's numbers were sure to be closely scrutinized for signs that Big Blue overcame the first-quarter problems that resulted in earnings of 84 cents per share, or 85 cents on a recurring basis, well short of the 90 cents in analysts' forecasts. At the time, some analysts said the gap would have been even bigger had IBM not misled Wall Street about the effect of expensing employee stock options. IBM said last month that the Securities and Exchange Commission was investigating. One of the weak spots blamed for the first-quarter results was the technology-services division, which provides more than half of revenue. associated press