IBM’s Stock Jumps as Q1 Financials Meet Expectations
IBM Wednesday announced that its first quarter financial results met analyst expectations, which sent Big Blue’s stock prices up $6, or 5.6 percent.
The Armonk, N.Y.-based company earned $1.75 billion, or 98 cents a share, surpassing last year’s first-quarter mark of $1.52 billion and 83 cents per share. Wall Street predicted IBM to finish the quarter at 98 cents per share.
IBM’s CEO Lou Gerstner noted some highlights in a statement: "Our Shark storage revenues grew 82 percent; At the same time, our Unix-based pSeries revenues were up 33 percent; our PC-based xSeries revenues grew 14 percent; and z900 mainframe grew 40 percent."
IBM’s first-quarter performance contrasted that of competitor Hewlett-Packard, which Wednesday issued a warning that it would not hit earnings estimates and revealed plans to lay off 3,000 of its employees.
The PC segment of IBM’s business was its poorest performing unit, as it posted a $58 million loss for the quarter.
“The desktop segment is hurting--and it is not just a cyclical issue," said Gerstner. "This is a mature business, and it no longer drives the economics of the IT industry."
According to IBM, its respectable showing for the quarter is due in large part to its services and middleware divisions, which accounted for approximately 80 percent of the company’s quarterly growth. Hardware, on the other hand, played a more peripheral role, as mainframes were responsible for just five percent of the company’s growth during the quarter.
Global financing sales during the first quarter rose slightly to $832 million from their year-earlier mark of $816 million. Revenue in the enterprise/other category fell to $276 million, from $341 million in the year-ago quarter.
Despite the volatility of the U.S. economy, IBM is sticking to its per-share estimates of $4.87 for 2001.