BM Profit Rises 6.3% as Service Sales Accelerate
Enviado: 16/10/2007 20:56BM Profit Rises 6.3% as Service Sales Accelerate (Update1)
By Matthew R. Miller
Oct. 16 (Bloomberg) -- International Business Machines Corp., the biggest computer-services company, said third-quarter profit rose 6.3 percent on new contracts and software sales.
Net income climbed to $2.36 billion, or $1.68 a share, from $2.22 billion, or $1.45, a year earlier, Armonk, New York-based IBM said today in a statement. Sales rose 6.6 percent to $24.1 billion, matching the average of estimates compiled by Bloomberg.
IBM won contracts with Bank of Nova Scotia and Canadian Pacific Railway Ltd. in the quarter, increasing revenue from services 14 percent, more than quadruple the pace a year earlier. Chief Executive Officer Sam Palmisano has used these types of deals to win more clients for its software.
``The quarter was in line with expectations,'' Deutsche Bank Securities' Christopher Whitmore said in an interview. ``Upside from the services business offset much weaker than expected results in hardware.'' The San Francisco-based analyst rates the shares ``buy.''
Hardware revenue fell 10 percent to $4.9 billion, missing Whitmore's estimate. Palmisano has gotten rid of hardware businesses such as the personal-computer and printing units to focus on more profitable divisions, including services.
IBM shares fell $1.78 to $117.82 in extended trading after closing at $119.60 on the New York Stock Exchange. They have advanced 23 percent this year.
Analysts' Estimates.
Analysts on average estimated that profit would rise to $1.68 a share, according to a Bloomberg survey.
Total sales of computer services climbed to $13.7 billion, beating the $12.9 billion estimate of Cowen & Co. analyst Louis Miscioscia. In last year's quarter they advanced 2.7 percent. IBM said the growth was the fastest since 2003.
In July, IBM signed a $1.4 billion contract with AstraZeneca Plc to manage data storage, desktop computers and help desks in 60 countries, as well as a five-year deal with Canadian Pacific.
The company also won a C$480 million contract renewal with Scotiabank, Canada's second-biggest lender, to manage data centers and automated teller machines. The contract includes the purchase of software licenses and equipment, according to Scotiabank Chief Technology Officer J.P. Savage.
Software revenue advanced 6.5 percent to $4.7 billion, trailing New York-based Miscioscia's prediction of $4.87 billion. IBM has spent about $10 billion on acquisitions since 2001 to bolster its software unit, according to data compiled by Bloomberg.
To contact the reporter on this story: Matthew R. Miller in Atlanta at mmiller31@bloomberg.net
Last Updated: October 16, 2007 16:38 EDT
By Matthew R. Miller
Oct. 16 (Bloomberg) -- International Business Machines Corp., the biggest computer-services company, said third-quarter profit rose 6.3 percent on new contracts and software sales.
Net income climbed to $2.36 billion, or $1.68 a share, from $2.22 billion, or $1.45, a year earlier, Armonk, New York-based IBM said today in a statement. Sales rose 6.6 percent to $24.1 billion, matching the average of estimates compiled by Bloomberg.
IBM won contracts with Bank of Nova Scotia and Canadian Pacific Railway Ltd. in the quarter, increasing revenue from services 14 percent, more than quadruple the pace a year earlier. Chief Executive Officer Sam Palmisano has used these types of deals to win more clients for its software.
``The quarter was in line with expectations,'' Deutsche Bank Securities' Christopher Whitmore said in an interview. ``Upside from the services business offset much weaker than expected results in hardware.'' The San Francisco-based analyst rates the shares ``buy.''
Hardware revenue fell 10 percent to $4.9 billion, missing Whitmore's estimate. Palmisano has gotten rid of hardware businesses such as the personal-computer and printing units to focus on more profitable divisions, including services.
IBM shares fell $1.78 to $117.82 in extended trading after closing at $119.60 on the New York Stock Exchange. They have advanced 23 percent this year.
Analysts' Estimates.
Analysts on average estimated that profit would rise to $1.68 a share, according to a Bloomberg survey.
Total sales of computer services climbed to $13.7 billion, beating the $12.9 billion estimate of Cowen & Co. analyst Louis Miscioscia. In last year's quarter they advanced 2.7 percent. IBM said the growth was the fastest since 2003.
In July, IBM signed a $1.4 billion contract with AstraZeneca Plc to manage data storage, desktop computers and help desks in 60 countries, as well as a five-year deal with Canadian Pacific.
The company also won a C$480 million contract renewal with Scotiabank, Canada's second-biggest lender, to manage data centers and automated teller machines. The contract includes the purchase of software licenses and equipment, according to Scotiabank Chief Technology Officer J.P. Savage.
Software revenue advanced 6.5 percent to $4.7 billion, trailing New York-based Miscioscia's prediction of $4.87 billion. IBM has spent about $10 billion on acquisitions since 2001 to bolster its software unit, according to data compiled by Bloomberg.
To contact the reporter on this story: Matthew R. Miller in Atlanta at mmiller31@bloomberg.net
Last Updated: October 16, 2007 16:38 EDT