IBM profits skyrocketed in the second quarter, topping $1.8 billion and beating Wall Street estimates by 8 cents a share.
“A Big Blue Blowout” is how The Street.com described Big Blue’s performance.
Earnings were $1.14 a share.
IBM shares climbed $3.79 in after hours trading to $85.60.
“IBM returned to form in this quarter. In particular, strategic, high-growth businesses – in business performance transformation services, software and in key industry sectors and emerging markets — were among our best-performing operations, achieving double-digit revenue growth,” said Sam Palmisano, chairman and chief executive officer of IBM, in a statement. “In addition, IBM Business Consulting Services posted an outstanding quarter, with strong revenue growth and a 30 percent increase in signings. This performance reinforces our confidence in our business model, and in our mission to apply unique, high-value skills and solutions to transform our clients’ businesses.”
IBM promised changes after reporting a profit of 84 cents a share in the first quarter, missing estimates by 6 cents.
Overall second quarter revenues hit $22.3 billion. That represents a 4 percent decline fro the same quarter in 2004, but IBM has since sold off its PC division based in RTP to Lenovo. If PC division results are backed out of the 2004 report, IBM said revenues this quarter would show a 6 percent increase.
“IBM made several strategic and important transitions in the second quarter,” Palmisano said. “We seamlessly moved our PC business to Lenovo, implemented a streamlined management system in Europe, and restructured important parts of the company for future growth.”
Restructuring costs related to layoffs and other changes were $1.7 billion, IBM said. However, those costs were offset by $1.1 billion from the sale of the PC division and a $775 million settlement from Microsoft.
IBM also announced plans in March to lay off as many as 13,000 workers. Some 7,000 layoffs have taken place, including some in RTP.
IBM: www.ibm.com
