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April 24, 1997updated 05 Sep 2016 12:37pm

IBM’S Q1 BEATS ESTIMATES DESPITE FLAGGING MAINFRAME SALES

By CBR Staff Writer

IBM Corp reported first-quarter figures that were well in excess of analysts’ expectations, in spite of decreased sales of mainframes and a strong dollar. Net income for the quarter was up 54% at $1.2bn – or $2.37 per share – ahead of Wall Street projections of $2.28, on revenue which increased 5% to $17.3bn. Excluding a charge associated with acquisitions taken in the first quarter of 1996, net income was essentially flat. The company says that its server business was adversely affected by product transitions – which hurt System/390 sales – and, as so many others complain of, ongoing weakness in Europe – hitting the AS/400 numbers. RS/6000 sales continued to suffer in the face of competition. Overall hardware sales were flat at $7.8bn, with PC, PC server and storage system revenues all slightly up. Services, as expected, more than offset weaknesses elsewhere, with revenues climbing 28% to $4.1bn. Services contracts signed during the quarter were worth roughly $3bn. Software revenues declined by 3% to $2.9bn, although the company says shipments of Tivoli management software were more than double the same period last year and Lotus Notes installations increased by about 1.7 million seats to approximately 11 million. On a constant currency basis, hardware revenues were up 5%, services grew 34% and software rose 2%. Maintenance revenues for the quarter declined 8% to $1.6bn, and revenue from rentals and financing improved 4% to $899m. Geographically, Big Blue’s North American revenues were up 14% at $7.9bn; Europe/Middle East/Africa predictably declined 7% to $5.3bn; Asia-Pacific rose 3% to $3.4bn and Latin America increased 2% to $701m. With one good quarter behind it, IBM just needs to get through one more before – according to analysts at Morgan Stanley – it enjoys an impressive second half of 1997.

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