ENTERPRISE VENDOR IBM announced a 17 percent drop in second quarter profits to $3.2bn despite mainframe sales increasing by 11 percent.
IBM, one of the economy's most resilient companies, had been able to weather the financial storm until announcing thousands of job cuts recently. Now the company has announced that it saw a 3.3 percent drop in revenues to $24.9bn, and more worryingly a 17 percent drop in profits to $3.2bn.
IBM announced that sales of mainframe systems rose by 11 percent, however its wider Systems and Technology division reported an 11 percent drop in revenue. The firm's Analytics and Smarter Planet business units saw 11 percent and 25 percent increases in revenues, respectively, which will further spur speculation that IBM might sell its small server business to concentrate on big systems, services and software.
Chair, CEO and president of IBM Ginni Rometty said, "Going forward, we will continue investing in our strategic growth initiatives, acquiring and divesting capabilities, re-balancing skills and taking action in the areas that are not performing.
"We expect continued improvement through the second half of the year and remain confident that we will achieve our increased 2013 operating EPS expectation of at least $16.90, excluding the $1 billion workforce rebalancing charge in the second quarter."
IBM has become the standard against which other big information technology firms such as HP and Dell are measured. While IBM's profits showed an alarming dip, there is little doubt that the firm is in a much better position than HP or Dell, with a services backlog of $141bn and revenues from cloud services having increased by 70 percent.
Despite the decline in profits, IBM's stock barely moved yesterday and in after hours trading the firm's shares are going for $199.60, a 2.6 percent increase from yesterday's closing price. µ
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