IBM Q3 Revenue Rises, but Signs of Downturn Loom

IBM on Thursday reported third-quarter revenue of US$25.3 billion, up 5 percent from the year before, but also said hardware sales and new service contract signings had slowed.

Net income grew by 20 percent to $2.8 billion, with earnings per share increasing 22 percent to $2.05. Analysts polled by Thomson Reuters had on average predicted earnings of $2.03 per share, with about $25.9 billion in revenue.

IBM's sales were hurt by a slowdown in the Systems and Technology segment, which had $4.4 billion for the quarter, down 10 percent. System z mainframe sales were a bright spot within the division, however, rising 25 percent.

While Global Technology Services revenue rose 8 percent to $9.9 billion, and Global Business Services sales increased 7 percent to $4.9 billion, new service contract signings -- a predictor of future revenue -- fell 4 percent to $12.7 billion. However, short-term signings grew 13 percent to $6.1 billion.

Software revenue increased 12 percent to $5.2 billion. Strong performers there included Information Management and Rational products, with 26 percent and 23 percent growth, respectively.

On a geographic basis, Americas' third-quarter revenue was $10.5 billion, an increase of 3 percent over 2007; Europe/Middle East/Africa sales were $8.9 billion, for 10 percent growth; and revenue in Asia-Pacific increased by 6 percent to $5.2 billion.