IBM software sales help spur 'powerful' $26.8 B quarter
By Jacqueline Emigh | Published July 18, 2008, 5:48 PM
Even with the current slowdown in spending on information technology, IBM's net income grew 13 percent to $26.8 billion for the second quarter of this year, driven largely by booming sales in software and services.
"I've got to say that this is one of the best quarters I've ever seen -- and remember, we delivered an outstanding second quarter a year ago. So these are truly powerful results," contended Mark Loughridge, IBM's CFO and senior VP, during a conference call with analysts.
IBM's net income stepped up 22% to $2.8 billion for the quarter. Software revenues -- accounting for $5.6 billion of IBM's $26.8 billion in revenues -- were up 17% this quarter over the same quarter a year ago. Middleware products -- making up the lion's share of IBM's software sales -- also grew 17%, to a total of $4.3 billion. Loughridge cited companies' interest in personal productivity as a significant factor in the software gains. "Customers continued to invest to improve the personal productivity of their workforce," he told the analysts.
But key software acquisitions also played a major role. IBM's Rational unit, which now includes the recently acquired Telelogic, rose 37% in revenue. Similarly, revenues for information management software, now augmented by IBM's buyout of business intelligence (BI) specialist Cognos, gained 30%.
Revenue growth for other IBM software products amounted to 21% for Lotus and 9% each for IBM's WebSphere middleware and Tivoli systems management software.
Yet although acquisitions of software companies require an investment, the buyouts can also bring new customers with them. In the case of a huge, diversified IT vendor such as IBM, software growth can also help to fuel growth in services and hardware sales.
"At the same time, our services momentum continued with great revenue growth, signings growth, and margin expansion. This is the fourth consecutive quarter that [IBM] Global Services revenue growth has been above our longer term objectives. Signings were $14.7 billion at actual rates, up 12 percent," Loughridge said.
"We signed 13 deals larger than $100 million and our backlog was an estimated $117 billion at constant currency, up $1 billion year to year." IBM also saw large revenue gains from sales of some hardware products, including a 32% increase for System z mainframes and a 29% improvement for System p. Loughridge also emphasized the wide geographic spread of IBM's revenue increases in the quarter -- amounting to 5% in the US, 8% for the Americas in general, 16% in the Asia-Pacific region, and 20% in Europe, Middle East and Africa (EMEA).
woohoo!
champagne and caviar for all the executives and board members. There will be B-I-G bonus's for buying more mansions, Porsche's, yachts and tax exempt donations to their favorite political party, i.e. Republicans...
oh yeah, the little guys will not be forgotten and will receive an increase in their hourly wages.
25 cents for Republican employees and 5 cents if they are democrats.
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|Ahhh....there's that overblown sense of entitlement this topic was so desperately missing...
You're more than eager to jump in and claim all the profits, but you'll rail and whine and moan if they even *think* of cutting your wages if their profits take a dive.
How cute.
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|A lot of the gains have something to do with reducing "overhead" (layoffs) and "globalization" (sending jobs international). Not to mention busting salaries down and now limiting OT. It's all about the company and not the employee anymore.
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|IBM's big globalization efforts occurred almost 9 years ago, not in the last year!
It has ALWAYS been about the company! Even efforts to 'enhance the worker experience' are about the company! That is by definition the responsibility of the corporation, despite such sanguine rhetoric of being "about the employees".
And after all of the quaint populism, your opinion completely ignores their substantial sales of services and hardware during the last year that are GLOBAL, with 44% of their revenue increases coming from sales outside the US while only 5% are from the US!
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|And in 9 years how many jobs have gone international? How many US folks have been humiliated by folks like you who think it is alright for a company to brutalize it's employees systematically all the while claiming record profits and millions for it's executives. My opinion does not ignore sales. Sales are fine and yes most sales are international but the services folks holding down the fort here in the US, the one's who keep the contracts renewing, they are the one's who need recognitiion. They are the one's who are ignored and rarely compensated commensurately for the hard work they always do.
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|Brutalized? Humilited?
You are an @ss!
As a former IBMer, the resources of my former division BTW are now primarily centered in India and China where the MAJORITY of their revenue is now being generated! But we won't let that small incidental point confuse your myopic selective attention. Re-read the article, genius!
And you are absolutely WRONG, as the majority of the "services" are not being performed in the US! In fact, they have s***ed their GLOBAL SERVICES department to a distributed international model rather than having it located simply in the US.
But feel free to continue with your asinine tired anti-corporation rant that is based upon your nonsensical fantasy. Not only has their structure become more international , so has their business. But facts haven't slowed you down up to this point and there is no reason to indicate that they might intrude upon your hallucination in the future.
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|Your insults are unimportant. I am a current IBMer in the US and have been for over 15 years. You are a "former IBMer"?. Get "downsized"? Most likely you were in management by your attitude. Typically they will never acknowledge how NAFTA and IBM globalization have hurt the IBM workforce in the US. Current management use job loss threats, constantly preaching the manufacturing philosophy of LEAN and how it will "save" the company. Save it from what we are still trying to figure out as every year record profits keep churning out and more layoffs loom. Raises have not come for most of us in over 5 years because they use a pay system based on market place averages where if your position is a certain percentage over a midpoint in your band you don't get a raise no matter your performance or productivity. So no adjustments for inflation over the past 5 years means we are at least 10% below where we should be. I am not anti-corporation at all, I just don't like IBM practices towards it's employees, the folks who help them get those record profits every quarter. If you read the international news you see IBM employees are organizing despite IBM efforts to stop it. They also are tired of what IBM does to them. So I am not living a fantasy you are living in a rose-colored bubble turning a blind eye.
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|A lot of the gains have something to do with reducing "overhead" (layoffs) and "globalization" (sending jobs international). Not to mention busting salaries down and now limiting OT. It's all about the company and not the employee anymore.
*laughs*
So...
They should not lay anyone off.
They should not send any jobs overseas.
They should only raise salaries, never lower them.
And they should allow unlimited overtime.
That about cover it?
Wow. That's just too funny. Mind if I pass that around a bit?
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|IBM has been in the process of "organizing" for over 30 years! (which sort of tells you part of what the problem with IBM is! ...not to mention that it is so large and diverse that one hand is totally clueless about what the other is doing!)
The market place average system you mention is the system employed by the US government! It is how companies are able to hire a foreign contract worker for a job defined as a (plug in the Dept of Labor functional job title) and pay them the national 'average' wage for say a generic "sys admin" (including someone administering a single Windows box in Fargo, ND)when the competitive pay for someone working as a definitely non-average "sys admin" with a massively parallel globally distributed HA-GEO systems living in Boston where the cost of living is just a little higher.
Hence we literally saw H1B visa holders - guys with families of 5 - ecstatic to be hired for $27K (& we seriously wondered how they managed to eat with the cost of living in some of the locations) when the commensurate competitive rate for the specific environment in a particular location was well into the 6 figures!
The fact is, if anyone is surprised by this they don't belong at IBM!
So, how does the definition of insanity go...doing the same thing over and over and expecting the outcome to differ...
The surprise is that they still haven't relocated the jobs entirely to other areas of the world where the skills are JUST as high (or higher) and the wages and cost of living is lower - just as their market is correspondingly s***ing.
I know its 'hard'(sic) to understand, but IT tech work is a commoditized market. We fought for so many years to open the rest of the world to such opportunity and they are now knocking at the door, eager for a piece of the pie.
And like it or not, they are a bit hungrier for opportunities than those sitting on their butts telling us about their entitlement to raises when the domestic increases in sales are a barely able to keep up with inflation!
One can sit in their cubical wondering why their exotic shoe making career is folding, or they can recognize that the American labor market for making shoes has sailed!
What is both sad and funny is to watch so many who are so bright sit and expect such trends to reverse! Or even sadder, to think that a union will stop that!
One would think (read: "HOPE") someone capable of following and predicting technological change would also have the wherewithal to predict similar developments in the job market, and adjust accordingly.
Evidently not.
Being surprised by disruptive market developments is perhaps excusable. But Willful ignorance is not.
So tell me, who has a blind eye???
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|Go figure...and we keep hearing from so many folks here that not only is UNIX dead ("including a 32% increase for System z mainframes and a 29% improvement for System p."}, but that if your primary business isn't Windows, that you can't succeed in the enterprise space.
...And they don't even make PCs!
...More than a few could benefit greatly from learning what really constitutes IT in business.
;-)
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