IBM chairman and chief executive professed himself comfortable with our strategies [and] with the fundamental strengths of our business following a strong fourth quarter topping off a year of solid growth at Big Blue, which saw record earnings per share for the year. Nevertheless, earnings per share for the quarter were just below analysts expectations, coming in at $2.11, or $2.09bn. Analysts had been expecting $2.15 a share, although some so- called whisper numbers earlier in the day were far more pessimistic, falling into the $1.90s range. Fourth quarter revenues were up 3% to $23.7bn. On a regional basis, business in North America saw growth of 9% to $10.4bn, Asia Pacific remained flat at $4.4bn, Europe declined 4% to $7.7bn and Latin America grew 4% to $1.2bn. Gerstner picked out for special notice the high growth in the services business, where revenues totaled $5.9bn, up 18% from the same period last year, although services margins remained essentially flat. IBM signed $8.5bn in new services contracts during the quarter. Software revenues grew only 1% to $3.8bn for the quarter, though they were up 7% at constant currency rates, with strong performances from Lotus Notes, the Tivoli systems management division and database software products. Hardware sales declined 1%, though here again IBM was hurt by currency fluctuations, and would have seen a 4% growth under constant currency. RS/6000s, storage and semiconductor revenues were up while AS/400s, System/390 mainframes, and to IBM’s annoyance after a major marketing effort consumer personal computers were all down in the quarter. Maintenance revenues declined 9% to $1.6bn and rentals and financing were down 4% to $1bn. For the year, IBM saw earnings of $6.1bn, a record $6.18 per common share, compared with $5.9bn or $5.53 per common share last year, with revenues up 3% at $78.5bn. Reflecting the fourth quarter performance, service revenues were up 22% to $19.3bn, software was down 2% to $12.8bn, hardware was flat at $36.2bn, while maintenance revenues fell 3% and rentals 4%. IBM continued its somewhat controversial practice of buying back its share in order to build up its earnings per share. Last October, it added $3.5bn to its share buyback budget. Over the year, common share repurchases amounted to over $7bn, including $2bn on the fourth quarter.
