IBM Earnings – 2Q/2003

IBM LogoI don’t normally post IBM news reports, but the current earnings report got me thinking about the information technology industry more broadly so I decided to share my simple observation. In my travels to conferences around the world I have heard people say that spending for information technology is not growing, or is flat, or is down, or even non-existent. I have even heard it said that "there are absolutely no IT projects happening"! IBM is in the information technology business — that is where nearly all of it’s revenue comes from — services, software, and hardware. If customers don’t spend, there is no revenue. IBM’s revenue for the the second quarter of the year was $21.6 billion. No matter how you slice it, dice it, adjust for currency, reorganizations, acquisitions or deacquisitions, it comes out to more than $200 million per day. Per day!

According to the IBM quarterly earnings report, diluted earnings per share of $.98 from continuing operations increased 292 percent in the second quarter. Income of $1.7 billion grew 288 percent, and revenues were $21.6 billion, up 10 percent. Revenues from continuing operations for the second quarter were $21.6 billion, up 10 percent compared with 2Q02 revenues of $19.7 billion.

Revenues from IBM Global Services, including maintenance, increased 23 percent in the second quarter to $10.6 billion aided by the addition of the former PwC Consulting business. Total hardware revenues from continuing operations decreased 1 percent to $6.6 billion from the 2002 second quarter. Also in the second-quarter 2003, Personal Systems Group revenues declined 3 percent to $2.7 billion primarily from lower revenues for personal computers. Technology Group revenues were $659 million, down 34 percent. Revenues from Software increased 6 percent to $3.5 billion. The company’s total gross profit margin from continuing operations was 37.0 percent in the 2003 second quarter, unchanged from the same period in 2002.