IBM turns in $2.6 billion profit

Big Blue (IBM) said that its revenues for its first financial quarter amounted to $22.9 billion and delivered a net profit of $2.6 billion.

That compares with a net profit of $2.3 billion for the same quarter last year, a rise of 13 percent in profitability, although revenues only increased by five percent, year on year.

IBM's CEO, Sam PalmisanoSam Palmisano, the CEO, president and chairman of IBM, said he was confident the company would continue to grow revenues given the mix of high value business it transacts.

However, a breakdown of its results shows that while key parts of its business showed an increase in the first quarter, services signings amount to $12.3 billion, a two percent drop.

Software revenues were up by 11 percent, and services revenues were up by four percent, while consulting services signings rose 18 percent and outsourcing signings rose by six percent.

American revenues amounted to $9.5 billion, a flat increase compared to 2009. While EMEA revenues were up by five percent and amounted to $7.6 billion, currency fluctuations meant an effective drop. OEM revenues soared by 18 percent to amount to $543 million.

Revenues from System X hardware increased by 36 percent, while revenues of IBM’s mainframe System Z products fell by 17 percent compared to the same quarter last year. It’s POWER chip revenues also fell by 17 percent.

IBM turned in a gross margin of 43.6 percent for the quarter, bolstered by better margins in the services and software sectors.