IBM revenues stall as big deals falter

Computing giant IBM has posted revenue growth of just 0.8% to $27.2 billion for the final quarter of 2009, reflecting a decline in systems and consultancy sales. Were it not for favourable currency exchange rate fluctuations, quarterly revenue would have declined by 5%, the company said.

Despite this lacklustre revenue, IBM did manage to grow net income by 9% to $4.8 billion, thanks in part to a $3.7 billion cost cutting drive.

IBM also bolstered its new services signings during the quarter, increasing them 9% to $18.8 billion, ahead of its initial forecast of $17 billion, lend further weight to predictions of an upturn in IT services during 2010.

In a conference call, IBM explained that customers had held back on larger contracts as a result of the unfavourable economic climate, but insisted that some major software deals will “roll over” into the first quarter.

The company said that it was expecting recent investments in cloud computing and advanced analytics to play a larger role in its overall operations this year. Earlier this week, it signed a major deal with Panasonic that will see up to 300,000 of the electronics manufacturer’s employees use IBM’s cloud-based LotusLive online collaboration suite for its worldwide operations.

“These new capabilities position IBM to grow as the economy recovers,” said Sam Palmisano, IBM chief executive officer. “The increased operational leverage we have established by creating a globally integrated enterprise will enable us to drive greater profits as revenue growth returns. We are confident about 2010 and our ability to achieve the high end of our long-term roadmap.”

In a report published earlier this month, Forrester Research forecast that technology spending would return to growth in 2010 after a two-year slump. This, combined with IBM’s relatively upbeat assessment for the year, suggest that a revival in the enterprise technology sector could be inbound.

Peter Done

Peter Done is managing director of Peninsula Business Services, the personnel and employment law consultancy he set up having already built a successful betting shop business.

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