Arik Hesseldahl

Recent Posts by Arik Hesseldahl

IBM Results Fall Short of Forecasts

IBM reported quarterly estimates that slightly beat the Street, but sales that were slightly behind the consensus of Wall Street analysts.

The company reported per share earnings of $3.28 on sales of $26.2 billion. Analysts had estimated sales to come in at $26.25 billion and per-share earnings of $3.22.

IBM raised its guidance on its outlook for earnings in the 2011 fiscal year to at least $13.35 from $13.25 previously. The company is working toward a publicly stated goal of delivering $20 per share in earnings by its fiscal year 2015.

IBM shares fell nearly 2 percent ahead of the report and closed at $186.94 during regular trading. The shares fell further in after-hours trading, dropping $8.53, or more than 4 percent, to 182.00 soon after closing. The shares are up nearly 30 percent since the start of the year.

The growth in revenue amounts to 8 percent, or 3 percent after adjusting for currency implications. Operating income grew by $4 billion or 9 percent. IBM’s operating margin was 46.8 percent, up 1.5 points.

Services revenue was up 8 percent, and IBM reported a services backlog of $137 billion, up $2.4 billion. Revenues from the software sales were $5.8 billion, an increase of 13 percent. Hardware sales totaled $4.5 billion for the quarter, up 4 percent. Financing revenues decreased 2 percent in the third quarter to $520 million. Perhaps this is why Big Blue made a big push on financing for small businesses last month.

On the brighter side, IBM did well in growth markets. They accounted for 23 percent of sales and contributed more than half of IBM’s sales growth on a constant currency basis so far this year. Forty of those countries all reported double-digit sales growth in the quarter.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik