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July 16, 1990

SOFTWARE SALES SOAR BUT HARDWARE GROWTH SLOWS TO A CRAWL IN A DULL IBM SECOND QUARTER

By CBR Staff Writer

After a substantial improvement in the first quarter – compared with a very dull one a year earlier, there has been significant slowing in the second quarter, where the comparisons were rather more demanding. In what begins to look like a boilerplate statement, chairman john Akers says Demand across our product line remains good worldwide, adding that revenue and earnings growth was led by software, benefits from leasing activities and early results from our restructuring actions, and for once a note of caution – While first-half results are encouraging, much remains to be done this year. Increased competition and shorter product cycles are the rule in this industry. IBM is meeting these challenges by developing creative solutions that address our customers’ needs while continuing to streamline our operations. Breaking down the figures, sales in the quarter rose 4.4% at $10,564m – a marked slowdown from the 11.7% of the first quarter; support services rose 4.1% at $2,664m but software was up a storming 25.5% at $2,351m – very much a feature of the second quarter since it rose only 6.7% in the first quarter. Reversing the trend of the past decade, rentals and finance grew 38.5% to $916m, against 34.7% in the first quarter.

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