IBM said earnings per share rose 18 percent to US$1.16, beating the consensus estimate of US$1.12 from financial analysts surveyed by Thomson First Call. Revenue from continuing operations in the second quarter climbed 7 percent to US$23.2 billion. Adjusting for currency changes, IBM's revenue was 4 percent higher than the same period last year.
Echoing comments made in the two previous quarters, IBM executives said corporate spending on information technology continues to rise 4 percent to 5 percent. But IBM revenue in some areas, notably software and some of IBM's server lines, was down slightly or flat.
"Customer spending continues to improve, though not uniformly across all segments and regions," said Mark Loughridge, IBM's chief financial officer. "We, too, face some of the issues that have been highlighted by our competition in the last two weeks."
IBM's diversified business allowed it to return relatively strong earnings overall, according to Loughridge, who said IBM was "very pleased" with the second-quarter results.
Company chairman and CEO Samuel Palmisano voiced faith in IBM's business model and its position versus its competitors. "We are confident about our prospects going forward," he said in a statement.
In the second quarter this year, strong sales of IBM's zSeries mainframes and growth in its Global Services consulting arm helped fuel the solid financial results, the company said. Sales in emerging markets grew significantly, with sales in China, Russia, India and Brazil rising a combined 35 percent in the first half of the year, compared to the same period the previous year.
IBM's hardware revenue, which came in at US$7.4 billion, was 10 percent higher than in the second quarter last year, in constant currency. Global Services revenue, at US$11.3 billion, was up 2 percent, adjusted for currency.
But IBM's software business and global-financing arm were dark spots on the overall positive financial picture.
IBM's software revenue of US$3.5 billion was flat, compared to the same quarter last year--down 4 percent when adjusted for currency changes. Big Blue's Global Financing business came in at US$700 million, down 6 percent in constant currency.
In hardware, IBM blamed a transition to the Power5 processor for "significant" slowing of revenue in its iSeries midrange and pSeries Unix servers.
