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Wed, Jul 20, 2005 - Page 12 News List

IBM impresses with Q2 results

REBOUND The company handily beat Wall Street's expectations for the quarter, and investors responded by sending the stock up by over 4 percent in after-hours trading

AP , BOSTON

Investors were heartened after IBM Corp's second quarter earnings report provided evidence that Big Blue has rebounded from difficulties early in the year.

"IBM returned to form in this quarter," chairman and chief executive officer (CEO) Sam Palmisano said in a statement.

The technology bellwether reported on Monday that in the quarter ended June 30, net profit was US$1.83 billion, or US$1.12 per share, compared with US$1.74 billion, or US$1.01 per share, in the previous year.

However, that comparison is skewed because the sale of IBM's personal computer division to China's Lenovo Group Ltd (聯想) closed on May 1, lowering the figures IBM posted in the remaining two months of the quarter. Looking only at continuing operations, IBM showed a profit of US$1.85 billion, US$1.14 per share.

Second-quarter revenue was US$22.27 billion, down 4 percent from US$23.10 billion a year ago. Without the one month of sales in the PC business, IBM's revenue would have been about US$21.70 billion.

Analysts surveyed by Thomson Financial had forecast earnings of US$1.03 per share on revenue of US$21.96 billion.

The strong showing impressed investors, who sent IBM shares up 4.3 percent, or US$3.51, to US$85.32 in after-hour trading on Monday on the New York Stock Exchange. Still the stock is down 16 percent this year.

The second-quarter figures included three big one-time events that Wall Street traditionally discards when assessing a company's performance. IBM showed a gain of US$1.1 billion from the Lenovo sale and a US$775 million boost from an antitrust settlement with Microsoft Corp. IBM also took a US$1.7 billion charge to account for the elimination of up to 14,500 jobs, primarily in Europe.

Solid figures

* The company said that net profit for the second quarter was US$1.83 billion, or US$1.12 per share.

* For the same period last year the company reported net profit c of US$1.74 billion, or US$1.01 per share.

* The second-quarter results included a US$1.1 billion gain from the sale of its PC unit to Lenovo, a US$775 million boost from a settlement with Microsoft and a US$1.7 billion charge from job cuts.


The company earlier had said the job cuts would top out at around 13,000. IBM's chief financial officer, Mark Loughridge, said about half the affected people have already left the company.

In the first half of this year, IBM earned US$3.23 billion, US$1.96 per share, on revenue of US$45.18 billion. In the first half of last year, the company's net income was US$3.10 billion, or US$1.80 per share, with revenue of US$45.27 billion.

Loughridge said analysts' forecasts for the rest of the year "remain reasonable," though he said second-half revenue could be hurt by a strengthening dollar.

IBM might also face a one-time tax charge of about US$450 million if it takes advantage of a new law that would let the company repatriate income earned overseas.

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