IBM adjusted its operating profit forecast for the year after beating analysts’ earnings forecasts for the second quarter, but said that an asset sale was now unlikely before the end of 2013.
Last three months, IBM said revenue fell 3.3% to $24.9 billion, missing analysts’ estimates of $25.4 billion for the second consecutive quarter, amid continuing weakness in China. Net income fell 16.9% to $3.2 billion, including $1 billion restructuring charge.
“In the second quarter, we delivered strong performance in our higher-value software and mainframe businesses and again significantly increased our services backlog on growth in new business,” said Ginni Rometty, IBM’s chief executive, cited by Financial Times.
IBM’s software sales rose by 4.1%, sustaining improvements in the unit over the past year and a half. However, the company saw revenue decrease in its services units, dragged lower by unfavourable currency fluctuations, and an 11.8% slump in its hardware unit, which includes its commodity servers and retail store systems, despite a strong improvement in mainframe sales.
Three months ago, IBM worried investors when it missed Wall Street earning forecasts for the first time in eight years. At that time, IBM blamed delays to closing some big software deals and uncertainty in China following leadership change in the government in one of its fastest-growing markets.
“We are exiting the quarter stronger than we entered,” Mr Loughridge said on Wednesday.
Today, IBM upgraded its underlying earnings per share expectations to $16.90, 1% increase, for the full year, to reflect the better than expected second-quarter performance. At the same time, the IT giant cut its overall earnings outlook, based on generally accepted accounting principles, to at least $16.25 a share.
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