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IBM: System z, Hardware Sales Down in Q1 2012; But Software Up


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IBM announced an overall 7% jump in profitability in the first quarter of 2012 over the previous year, but hardware and server revenues lagged. The company's net income for the quarter was $3.1 billion, compared with $2.9 billion in the first quarter of 2011. Total revenues for the first quarter of 2012 of $24.7 billion were flat (up 1%, adjusting for currency) from the first quarter of 2011.

Revenues from the Systems and Technology segment totaled $3.7 billion for the quarter, down 7% from the first quarter of 2011. Systems and Technology pre-tax income decreased $236 million. Revenues from System z mainframe server products decreased 25% compared with the year-ago period. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), decreased 5%.

Other server lines also showed weak performance in the most recent quarter, IBM reports. Total systems revenues decreased 6 percent. Revenues from Power Systems were flat compared with the 2011 period. Revenues from System x were also flat.  Revenues from System Storage decreased 4%, and revenues from Retail Store Solutions decreased 13% year over year. Revenues from Microelectronics OEM decreased 13%.

IBM's software lines, however, continued to grow. Revenues from the software segment were $5.6 billion, an increase of 5% compared with the first quarter of 2011. Revenues from IBM's key middleware products, which include WebSphere, Information Management, Tivoli, Lotus and Rational products, were $3.5 billion, an increase of 7% versus the first quarter of 2011. Operating systems revenues of $590 million increased 9% compared with the prior-year quarter.

Revenues from the WebSphere family of software products increased 16% year over year. Information Management software revenues increased 5%. Revenues from Tivoli software increased 5%. Revenues from Lotus software were flat, and Rational software increased 1%.

Revenues from the company's business analytics operations across services, software and hardware segments increased 14%.

Ginni Rometty, IBM president and chief executive officer, was bullish on the company's overall prospects: "In the first quarter, we delivered another excellent software performance, expanded services margins, and continued the momentum in our growth initiatives," she said in a prepared statement. "Our investments in growth market countries continued to generate strong revenue growth across software, hardware and services while contributing to the company's ongoing margin expansion."

Global Technology Services segment revenues increased 2% to $10.0 billion. Global Business Services segment revenues were down 2% to $4.6 billion.

For more information, visit the IBM website at www.ibm.com.


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