US computer giant IBM on Monday reported a first-quarter net profit slightly better than forecast, but revenue fell short of expectations.
IBM, which has weathered the global economic slowdown better than most major US corporations, said that net profit declined 1 percent in the first quarter compared with the same quarter last year to US$2.29 billion.
Revenue fell 11 percent to US$21.7 billion in the January-March period, below the US$22.5 billion expected by Wall Street analysts.
Earnings per share were US$1.70, up from US$1.64 per share in the same quarter last year and better than the US$1.66 per share expected by analysts.
IBM maintained its full-year earnings target for this year of at least US$9.20 per share and president, chairman and chief executive Samuel Palmisano said it was “ahead of pace for our 2010 roadmap of US$10 to US$11 per share.”
“IBM continued to perform well in a very difficult economic environment,” he said in a statement. “This was due to our long-term strategic focus: shifting into software and services, divesting of commodity businesses and creating solutions that help clients reduce cost and conserve capital.”
Palmisano, speaking on the same day that US business software giant Oracle swooped in and grabbed IBM acquisition target Sun Microsystems for US$7.4 billion, indicated that other takeover attempts could be in the offing.
“We are well-positioned to continue to move aggressively and leverage our strong cash performance to make the most of the opportunities that arise, including smarter planet initiatives and other strategic options,” he said.
The purchase of Sun gives Oracle a foothold in the hardware arena.
Sun is the fourth-largest maker of computer servers but has been steadily losing market share to failed suitor IBM, as well as Hewlett-Packard and Dell.
The deal amounted to US$9.50 per share for one-time Silicon Valley star Sun, or US$5.6 billion, and rose to US$7.4 billion including Sun’s debt and cash.
Gartner analyst Andrew Butler said the purchase “gives Sun a lifeline they desperately needed” and was “much more about software than hardware.”
“IBM will try to shrug it off,” he added. “But now they must be looking at their strategy.”
IBM chief financial officer Mark Loughridge played down Oracle’s purchase of Sun, whose board of directors reportedly rejected IBM’s takeover offer.
“We’ve been competing with Sun. We know Oracle inside out,” Loughridge said in a conference call with analysts after the quarterly earnings were released.
“They now have the same address and the same mailbox, but we’re talking about the same team that we’ve been competing against for some time and winning on the field,” he said.
IBM said revenue fell across all of its business units — from software to systems to business and technology services during the quarter — and around the world.
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