International Business Machines Corp. (IBM: Quote) said Wednesday after the markets closed that its second quarter profit rose 6% from last year, as improved gross margin and better expenses control helped offset a 3% decrease in revenue.
The company's quarterly earnings per share, excluding items, also came in above analysts' expectations, but its quarterly revenue fell short of analysts' forecast. At the same time, the company once again raised its full year earnings outlook.
"In the second quarter, we delivered strong profit, earnings per share and free cash flow growth. This performance reflects continued strength in our growth initiatives and investments in higher value opportunities," said Ginni Rometty, IBM president and chief executive officer. "These are fundamental elements of our long-term business model."
IBM shares are currently gaining 1.99% in after hours trading after closing the day's regular trading session at $188.25, up $4.60 or 2.50%. The shares trade in a 52-week range of $157.13 to $210.69.
For the second quarter, Americas revenues declined 1% to $11.1 billion and Europe/Middle East/Africa revenues fell 9% to $7.9 billion, while Asia-Pacific revenues increased 2% to $6.3 billion. OEM revenues for the quarter slipped 24% from last year to $512 million.
Revenues from the company's growth markets increased 2% in the second quarter. Revenues in the so-called BRIC countries -- Brazil, Russia, India and China -- increased 5%.
The company's global technology services group reported second quarter revenue of $10.0 billion, down 2% from a year earlier. Global business services group's revenue declined 4% to $4.7 billion in the second quarter. IBM is the world's biggest computer services firm.
The estimated services backlog at the end of the second quarter was $136 billion, down 6% year over year at actual rates.
IBM's software revenue for the second quarter remained essentially flat with last year at $6.2 billion. rose 5% to $5.6 billion in the first quarter.
Second quarter revenues from the company's Systems and Technology group fell 9% to $4.3 billion, with revenues from System z mainframe server products down 11%. IBM is the world's biggest server maker.
For the second quarter ended June 30, 2012, the Armonk, New York-based technology giant reported net income of $3.88 billion or $3.34 per share, compared to $3.66 billion or $3.00 per share for the year-ago quarter.
Excluding items, operating earnings for the second quarter were $4.08 billion or $3.51 per share, compared to $3.78 billion or $3.09 per share in the prior year quarter.
On average, 22 analysts polled by Thomson Reuters expected the company to earn $3.42 per share for the second quarter. Analysts' estimates typically exclude special items.
Gross margin for the quarter improved to 47.6% from 46.4% a year ago on a reported basis and to 48.2% from 46.8% last year on an adjusted basis.
Big Blue's total revenue for the second quarter fell 3% to $25.78 billion from $26.67 billion in the same quarter last year. Twenty-two analysts had a consensus revenue estimate of $26.28 billion for the second quarter.
Currency negatively impacted revenue growth by about $1 billion, the company noted.
IBM returned $4.0 billion to shareholders during the second quarter through $1.0 billion in dividends and $3.0 billion of share repurchases, and ended the quarter with $11.2 billion of cash on hand.
In April, The company's board of directors hiked quarterly dividend by 13% and also authorized $7 billion in additional funds for use in the technology giant's stock repurchase program.
IBM has been acquiring small companies to drive growth and expand product offerings. The company has plans to make $20 billion worth of acquisitions between now and 2015. During the second quarter, IBM completed the acquisitions ofVaricent Software Inc., Vivisimo, and Tealeaf Technology, Inc
Looking forward, the company raised its full year 2012 earnings guidance to at least $14.40 per share from its previous guidance of at least $14.27 per share. The company also raised its full year 2012 operating earnings guidance to at least $15.10 per share from its prior guidance of at least $15.00 per share. Analysts currently expect the company to earn $15.06 per share for the full year 2012.
| || |
| To receive FREE breaking news email alerts for International Business Machines Corp. and others in your portfolio|
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org