15 April 2005 Technology bellwether IBM has surprised market watchers with an unexpected bad set of financial results that saw profits stall and sparking concern over the health of the IT sector.

IBM’s first quarter results for the period ending 31 March 2005 showed profits up slightly from the same period a year ago, but it admitted that it had experienced problems closing deals in the crucial final few weeks of the quarter.

“We are taking appropriate measures to sharpen our execution, as we continue to implement our global growth strategies,” said Sam Palmisano, IBM’s CEO.

IBM also caught market watchers on the hop delivering its results four days earlier than expected. It reported profits of $1.41 billion compared to $1.36 billion a year ago.

IBM had a particularly disappointing quarter in its services business; it also reported problems in Germany, Italy, France and Japan.

The geographies that performed badly are all areas where the national economies have been struggling. But it was the performance in the services division that concerned analysts.

“The question is whether the disappointing performance in services sales was a one-off, worsened by organisational restructuring or a sign of a general market slowdown,” said Ian Wesley, a Research Director at analysts Ovum.

IBM has taken steps to improve performance in Europe, moving to lower cost facilities in Eastern Europe.