Financial

posted on 18 July 2008 04:51

IBM's Q2 fy08 revenues were $26.8 billion, 13 percent up on Q2 07. Its diluted earnings per share were $1.98, a 28 percent rise on the year-ago quarter's $1.55, which included $0.05 from the sale of the company's Printing Systems Division.

Total Global Services revenues grew 16 percent (8 percent, adjusting for currency).

Revenues from the Systems and Technology segment totaled $5.2 billion for the quarter, up 2 percent (down 3 percent, adjusting for currency).

IBM chairman, president and CEO Sam Palmisano said: "IBM had an outstanding quarter and a strong first half for 2008. These results demonstrate that IBM has the ability to thrive in both emerging and established markets. Once again, IBMers performed very well around the world."

Within the Systems and Technology unit:-

- Systems revenues grew 10 percent (4 percent, adjusting for currency).

- Revenues from System z mainframe server products increased 32 percent compared with the year-ago period.

- Revenue from the converged System p server products increased 29 percent compared with the 2007 period.

- Revenues from the System x servers decreased 5 percent,

- Revenues from the System i servers decreased 47 percent.

- Revenues from System Storage increased 12 percent,

- Revenues from Retail Store Solutions were flat.

- Revenues from Microelectronics OEM decreased 19 percent.

Within the software segment revenues from Tivoli software, that enables customers to centrally manage networks including security and storage capability, increased 9 percent

The System i servers, the old System 36 then AS400 product line, showed a large fall in revenue. This must be a red flag. The Intel-based x server line showed a much smaller but still unwelcome fall, illustrating the strength of Dell and HP competition. However high-end x server sales held up, testament to the need for servers to run virtualized software environments.

Total storage revenues grew 12 percent year on year; in Q1 08 total storage revenues grew 6 percent year on year. Back in Q2 08 high-end storage sales, the DS8000 line, exhibited growth of 24 percent. DS8000 sales growth seeems holding up very well indeed as Q1 08 revenue growth was 17 percent and Q4 07 growth was 21 percent.

Midrange/low-end disk storage revenue grew faster still, 28 percent year on year. IBM thought data center consolidation was one of the drivers behind the high-end sales growth. 

Palmisano said: "We are continuing to see the benefits of IBM's transformation in recent years. ... We feel good about our full-year outlook and our 2010 roadmap for $10 to $11 of earnings per share."

This indicates no strongly negative effects from the current US economiy's situation with a lot of volatility still around and recent financial institution woes: IndyMac; Freddie Mac; Fanny Mae, etc.

There are some industry expectations that IBM will announce an updated DS8000 line at some period within the third calendar quarter of the year, possible the fourth.

^{[Chris Mellor.]}