IBM eyes more acquisitions as Q3 revenues flatline

17 October 2002 Systems giant IBM said it would step up its acquisition activity as the company reported flat revenues for its latest financial quarter.

For the quarter to the end of September 2002, IBM reported flat sales of $19.8 billion (€20.3bn), year-on-year. This was despite an impressive 27% rise in sales of IBM’s WebSphere family of middleware products. But this growth did not offset a 3% drop in IBM’s overall software revenues.

IBM’s net income also fell, by 18% to $1.3 billion (€1.3bn). However, this included a $381 million (€390.4bn) loss from discontinued operations, largely related to IBM’s decision to sell most of its hard disk storage business to Japanese conglomerate Hitachi.

But IBM was boosted by a 2% increase in sales from its services division, excluding new revenues from the company’s $3.5 billion (€3.6bn) acquisition of PricewaterhouseCoopers Consulting. IBM completed the purchase in October 2002.

IBM Chief Financial Officer John Joyce said that PwC Consulting would add sales of about $1 billion (€1bn) to the company’s final quarter of 2002.

Looking to the future, Joyce told the Financial Times that IBM would adopt a more active acquisition strategy. “In the 1990s we passed on many [acquisition] opportunities because the valuations were too high. But we will be more active on acquisitions as valuations become more reasonable.”

Meanwhile, German enterprise software giant SAP reported revenues up 3% to €1.7 billion for its third quarter of 2002. However, the company has withdrawn its original full-year revenue forecast for 2002 and is not providing additional guidance, as the downturn in IT spending shows no sign of abating.

During its latest quarter, SAP’s software licence revenues dropped 3% to €435 million. Holding up this figure were strong sales related to SAP’s customer relationship management software, which rose by 19% to €93 million.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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