IBM continues to grow profits
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Focus on profitable business divisions helps computing giant grow third quarter net income 14% to $3.2 billion, even as revenue falls 7%
IBM continued to grow its profits during the third quarter of the financial year, despite a 7% fall in revenues to $23.6 billion.
The computing giant’s net income for the quarter grew by 14% to $3.2 billion. Excluding the first quarter of the current financial year, in which net income fell by 1%, IBM has enjoyed a two-year run of double-digit growth in net income.
CEO Sam Palmisano attributed the most recent quarter’s profit growth to the company’s “long-term strategic shift to higher-value businesses”.
Revenue was down in all segments of IBM’s business, but pre-tax income for its global technology services division – by far its largest – grew by 24% to $1.4 billion despite a revenue fall of 4% to $9.4 billion.
This continues an emerging theme amongst IT outsourcing providers. By driving operational efficiency and by recalibrating human resources capacity to match slowing demand, many such companies have managed to grow profitability despite falling revenues.
Another area of growing profitability for IBM was the company’s software business, for which income grew 21% to $1.9 billion on revenues that fell 2% to $5.1 billion.
However, global business services and the systems and technology unit – which includes its mainframe and server businesses – were both profit drains, with pre-tax income falling by 9% and 20% respectively.
