SAN FRANCISCO: IBM Corporation recorded reduced third quarter net profit at $1.52 billion, down 2.5 per cent compared with corresponding third quarter in the previous year. The earnings were held back by a $525 million tax charge for cash repatriated from overseas offices.
Revenue for the quarter fell 7.8 per cent to $21.5 billion from $23.4 billion, but after taking into account the company's sale of its PC business to China's Lenovo Group in May this year.
Revenue of global services business, which provides computer consulting and outsourcing to companies, showed a 3 per cent increase to $11.7 billion from $11.3 billion a year earlier, while computer hardware revenue, which includes sales of the company's z9 mainframe computers, which began in mid-September, rose 7 per cent to $5.1 billion.
Software business recorded 5 per cent increase to $3.8 billion. Consulting had earlier recorded reduced earnings, but the company recently won a 1.5 billion euro contract from ABN Amro Holding NV.
The company is reducing its headcount by more than 13,000 jobs, or 4 per cent of its total workforce.
IBM's chief financial officer Mark Loughridge said the company hoped to deliver double-digit earnings per share growth during the fourth quarter and into next year.
The company had carried out a restructuring following a dismal performance in the first quarter and this had led to higher productivity in its services unit resulting in a 25 per cent increase in earnings per share from a year ago. Loughridge said about 90 per cent of the cost savings from the planned restructuring had been achieved by the end of the quarter, with the rest due before the end of this year.
Another noticeable factor is that the company has posted two consecutive quarters of better than expected earnings.
IBM shares were up $1.60, or 1.9 per cent, at $84.19 in after-hours trade on Inet. They had gained 0.3 per cent in regular trade on Monday, closing at $82.59.
Posted
on : Wed, 19 Oct 2005 07:30 GMT | Business News
By : Pippa Fielding
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