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January 19, 2010

IBM has exceeded previous analysts' expectations and has delivered stronger sales and net profits for its 4th quarter. Big Blue guides this year's earnings forecast to the high end of previous estimates.

IBM today announced fourth-quarter 2009 diluted earnings of $3.59 per share compared with diluted earnings of $3.27 per share in the fourth quarter of 2008, an increase of 10 percent.

Fourth-quarter net income was $4.8 billion compared with $4.4 billion in the fourth quarter of 2008, an increase of 9 percent. Total revenues for the fourth quarter of 2009 of $27.2 billion increased 1 percent (down 5 percent, adjusting for currency) from the fourth quarter of 2008.

Samuel Palmisano, IBM's president and chief executive officer says "we concluded a strong year with a solid performance in the fourth quarter in which we again delivered growth in margins, profit and earnings. IBM continued to benefit from our strategic transformation, offerings that our clients value in this economy, and our strong commitment to developing countries around the world.

"Last year, we invested in opportunities such as Smarter Planet solutions, cloud computing and advanced analytics. These new capabilities position IBM to grow as the economy recovers. The increased operational leverage we have established by creating a globally integrated enterprise will enable us to drive greater profits as revenue growth returns. We are confident about 2010 and our ability to achieve the high end of our long-term roadmap."

The company said it expects full-year 2010 diluted earnings-per-share expectations of at least $11.00.

From a geographic perspective, the Americas’ fourth-quarter revenues were $11.1 billion, a drop of 3 percent (6 percent, adjusting for currency) from the 2008 period. Revenues from Europe/Middle East/Africa were $9.7 billion, up 2 percent (down 7 percent, adjusting for currency).

Asia-Pacific revenues increased 6 percent (down 3 percent, adjusting for currency) to $5.8 billion. OEM revenues were $648 million, up 5 percent compared with the 2008 fourth quarter. Revenues from the company’s growth markets organization increased 14 percent (2 percent, adjusting for currency) and represented 20 percent of geographic revenues.

Total Global Services revenues increased 2 percent (down 5 percent, adjusting for currency). Pre-tax income increased 7 percent. Global Technology Services segment revenues increased 4 percent (down 3 percent, adjusting for currency) to $10.1 billion.

Global Business Services segment revenues decreased 3 percent (9 percent, adjusting for currency) to $4.6 billion.

IBM signed services contracts totaling $18.8 billion, at actual rates, an increase of 9 percent (2 percent, adjusting for currency), including 22 contracts greater than $100 million.

Signings in Consulting and Systems Integration and in Integrated Technology Services were $7.4 billion, an increase of 1 percent (down 6 percent, adjusting for currency). Total outsourcing signings increased 15 percent (8 percent, adjusting for currency) to $11.4 billion.

The estimated services backlog at Dec. 31, 2009 was $137 billion at actual rates compared with $134 billion at September 30, 2009, and compared with $130 billion at year-end 2008.

Revenues from the Software segment were $6.6 billion, an increase of 2 percent (down 4 percent, adjusting for currency) compared with the fourth quarter of 2008. Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Lotus and Rational products, were $4.1 billion, an increase of 6 percent (flat, adjusting for currency) versus the fourth quarter of 2008.

Operating systems revenues of $621 million was flat (down 1 percent, adjusting for currency) compared with the prior-year quarter.

Revenues from the WebSphere family of software products, which facilitate customers’ ability to manage a wide variety of business processes using open standards to interconnect applications, data and operating systems, increased 13 percent year over year.

Revenues from Information Management software, which enables clients to leverage information on demand, increased 7 percent. Revenues from Tivoli software, infrastructure software that enables clients to centrally manage networks including security and storage capability, increased 7 percent, and revenues from Lotus software, which allows collaborating and messaging by clients in real-time communication and knowledge management, decreased 5 percent.

Revenues from Rational software, integrated tools to improve the processes of software development, decreased 4 percent.

Source: IBM.

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