IBM quarter driven by software, systems

New hardware and software releases fueled IBM's growth this year

Software and services fueled IBM growth in the second quarter of 2011, the company said Monday.

For the quarter ended June 30, IBM reported revenue of US$26.7 billion, which is up 12 percent from the same quarter last year. GAAP net income was $3.7 billion, up 8 percent. It reported non-GAAP net income of $3.8 billion, an 11 percent increase from the year before. Earnings per share were $3.00 by GAAP estimates, and $3.09 by non-GAAP accounting.

Overall, both software and systems grew by 17 percent, according to the company. Revenue from software provided $6.2 billion. IBM's key middleware products alone, such as WebSphere, Tivoli, Lotus and Rational, brought in $3.9 billion, a jump of 21 percent.

On the hardware side, the Systems and Technology segment generated $4.7 billion for the quarter. System z mainframe revenue grew by 61 percent; and MIPS systems sales enjoyed an 86 percent growth. Power System sales grew 12 percent from last year.

Services revenue growth trailed behind the rate for software and system sales, though it still grew at 10 percent. The company reported a backlog of $144 billion of work that has been booked, up by $15 billion from a year ago. Revenue from the Global Technology Services segment increased 11 percent to $10.2 billion and Global Business Services revenue rose 9 percent to $4.9 billion.

With these results, IBM beat analysts estimates, which forecast that the company would bring in $25.345 billion in revenue, with $3.7 billion in net income, according to a poll by Thomson Financial. As a result of this quarter's performance, IBM has raised its expectations for operating (non-GAAP) diluted earnings per share to at $13.25, up from the $13.15 that was the previous estimate.

In March, IBM launched a new e-commerce practice which it said would address the growing market for bringing computational capabilities to retail businesses, which the company expects to generate $70 billion in software sales by 2015. With the help of partners, the company has also been tailoring its software for small and medium-size businesses. The company also released the latest version of its WebSphere application server in June. In July, IBM launched its latest mainframe, the zEnterprise 114.

The company is also celebrating the 100th year anniversary of its founding.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com

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Joab Jackson

IDG News Service
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