IBM Posts Strong Q4 Profits, No Layoffs Announced
IBM on Tuesday reported fourth-quarter fiscal 2008 revenue of US$3.28 per share, a 17 percent increase year-over-year, but said total revenues for the quarter dropped 6 percent to $27 billion.
Analysts polled by Thomson Financial Network had on average predicted earnings of $3.03 per share and $28.15 billion in revenue.
Net income for the fourth quarter was $4.4 billion, a 12 percent increase over 2007. For the full year, IBM posted company records for revenue, with $103.6 billion; pre-tax profit, with $16.7 billion; and earnings per share at $8.93.
The company also said it expected earnings per share of at least $9.20 in 2009.
IBM said the strong dollar contributed to its drop in fourth-quarter 2008 revenue. When adjusted for currency fluctuations, revenue would have fallen 1 percent, the company said.
Software revenue grew 3 percent, but Global Technology Services and Global Business Services fell 4 percent and 5 percent, respectively, an indication that customers are pulling back somewhat on IT projects. However, IBM also reported service engagements worth $17.2 billion, including some 24 deals with a price tag higher than $100 million.
The company's press release made no mention of layoffs, which have been the subject of rampant rumors in recent weeks.
"Right now we're in wait-and-see mode," said Lee Conrad, national coordinator of the Alliance at IBM/CWA Local 1701, a union that is trying to organize workers at IBM, in an interview prior to the earnings release. "We do know people have been told to look for other jobs."
The union is calling on IBM to take certain measures to avoid layoffs, such as suspending its stock buyback program, eliminating executive positions and cutting executive pay. It also wants IBM to be transparent about where any job cuts are taking place and whether they are being moved offshore.
If it does cut jobs, IBM would be only the latest of its peers in the tech industry to do so as the worldwide economic crisis continues.
Forrester Research recently predicted that global IT spending would drop slightly overall this year, but then rebound in 2010.