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Fri, Jul 18, 2003 - Page 12 News List

IBM profits from its acquisitions

A WEAK US DOLLAR By selling its disk-drive unit and purchasing smaller rivals, IBM was given cause to celebrate, although some analysts were hoping for better results

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International Business Machines Corp, the world's largest computer maker, said second-quarter profit and revenue rose, helped by software and services acquisitions and the sale of an unprofitable disk-drive unit.

Net income gained to US$1.7 billion, or US$0.97, from US$56 million, or US$0.03, in the same period a year earlier, Armonk, New York-based IBM said in a statement. Sales rose 10 percent to US$21.6 billion, boosted by the purchases and the falling dollar.

Revenue increased 23 percent in services and 6.2 percent in software, units IBM has been expanding by buying smaller rivals.

The gains were less than some investors had forecast and computer hardware sales fell 0.9 percent. Revenue would have risen just 3 percent had the dollar been unchanged in the past year.

"The unhappiness will appear tomorrow when people look at the revenue side of the numbers," said Pete Kastner, an analyst and vice president at Aberdeen Group Inc, a computer-technology consulting and research firm.

"People were maybe hoping for better results," said Walter Casey, technology analyst at Banc One Investment Advisors, which owns IBM shares among its US$162 billion in assets. "The services business was a bit lighter than expected."

Companies continue to delay "major" software purchases, IBM chief financial officer John Joyce said on a conference call. "It's a tough market out there."

The company is on pace to meet analysts' profit and sales estimates, he said.

Meanwhile, Apple Computer Inc, the maker of iMac personal computers, said third-quarter profit fell 41 percent as it spent more to open retail stores and develop new products.

Sales rose as the company sold more laptop PCs.

Net income in the quarter ended June 28 fell to US$19 million, or US$0.05 a share, from US$32 million, or US$0.09, a year earlier, Apple said in a US Securities and Exchange Commission filing.

Sales rose 8.1 percent to US$1.55 billion from US$1.43 billion.

Apple chief executive Steve Jobs has tried to boost demand by investing in new software and computer designs such as a US$3,299 laptop with a 17-inch screen, increasing development costs.

"We've been continuing to invest through this economic downturn," chief financial officer Fred Anderson said in an interview. He forecast sales to rise in the current quarter and said profit will be higher than in the period just ended.

The company's laptop computers were its best sellers during the third quarter. Shipments of PowerBook PCs jumped 71 percent to 161,000 units, while iBook shipments increased 12 percent from a year before. Shipments of iMac and Power Mac desktop models declined. Overall, PC shipments fell 5 percent to 771,000, the company said.

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